Answer: TRUE

**TRUE.** On the initial exercise date, if the call price is low the owner of the put-on-a-call may exercise and sell the call. But then the buyer is short a call option, which has theoretically unlimited loss if the asset price later rises and the long option holder can exercise for a gain on the second date. By contrast, the other compound option types have limited downside: - **call-on-a-call** and **call-on-a-put**: if exercised, the buyer only ends up with an option. - **put-on-a-put**: the loss is limited to the strike price if the asset goes to zero.

Author: Manit Arora