A put option with a strike price less than the current spot price is said to be a) in-the-money b) out-of-the-money c) at-the-money d) profitable e) none of the above

Select all of the following statements that accurately compare or contrast forwards and options:   Group of answer choices   Taking naked long positions in either a call or forward will lead to an overall long position in the underlying security.   Options and forwards always have identical payoffs if the spot price remains the same.   Both options and forwards can be used to reduce exposure to foreign exchange risk.   Going long a naked put option and going short a naked forward both cause unlimited liability.   Both options and forwards require the payment of a premium at the initiation of the contract.   Forward contracts impose obligations on both parties in the transaction. Options contracts only impose an obligation on one party.

The potential loss incurred from purchasing a call option is finite, but the potential loss to the seller is unbounded.  Explain why the potential loss that the seller may occur is unbouned.

None