Explanation:

Short sellers create short positions by borrowing securities from long holders and selling them to other traders. The potential gains on a short position are capped at 100%, as the security price cannot fall below zero. However, the potential losses are unbounded, as the security price can theoretically rise indefinitely. Therefore, short sellers face limited gains and unlimited losses.

• Option A is incorrect because short sellers do not have unlimited gains; gains are limited to 100%.
• Option C is incorrect because while losses are unlimited, gains are not.