Please explain why the maximum loss to put seller is X-premium and not unlimited.
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short put means writing a put option which means you are bullish on a stock expects price to rise and want to earn premium paid by put buyer . so here your outflow will be occur when the stock price start falling and max it can fall to zero but you have already received put premium …. so max loss can be strike price – premium
opt a is max loss for a call writer
is this would be the max profit for call writer as well ?
max profit for call writer is call premium
max loss can be share price – call premium