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Answer: Both have unlimited upside and unlimited downside
A long call and a long futures position are similar in several ways: - Both can be valued analytically. - Neither position requires the full spot price upfront, so both are leveraged relative to owning the stock outright. - Neither position gives the holder the stock’s interim dividends. However, they are **not** similar in risk profile: - A **long call** has **limited downside** equal to the premium paid. - A **long futures** position has **unlimited upside and unlimited downside**. Therefore, the exception is **B**.
Author: Manit Arora
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136.2 A long (plain vanilla) call option and a long futures position, both on the same underlying publicly-traded stock, are similar in EACH of the following ways EXCEPT for:
A
Both can be priced analytically
B
Both have unlimited upside and unlimited downside
C
Both forgo interim dividends
D
Both are leveraged relative to the corresponding cash (spot) position
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