Options have a symmetric risk/reward relationship, while futures do not because the buyer of an option retains all the potential benefits, but the gain is always reduced by the amount of the option price.

Question

Quizplus · Accepted Answer

This statement is incorrect. Options do not have a symmetric risk/reward relationship, as the potential loss for the buyer of an option is limited to the premium paid, while the potential gain is unlimited. Futures, on the other hand, have a symmetric risk/reward relationship as both the buyer and seller have equal potential for gain or loss.

Options Have a Symmetric Risk/reward Relationship, While Futures Do Not