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    "Combining a longposition in an asset with a long position on a call in the same asset limitsthe amount that can be lost on the investment."

    Is the above statement even possible?

    Thanks x
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    (Original post by Graduate_1990)
    "Combining a longposition in an asset with a long position on a call in the same asset limitsthe amount that can be lost on the investment."

    Is the above statement even possible?

    Thanks x
    Yes it is possible, but it doesn't reduce the amount that can be lost, since buying a call option is still giving you exposure to the underlying asset. You're not hedging your position, you're just adding to it.
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    (Original post by Hackett)
    Yes it is possible, but it doesn't reduce the amount that can be lost, since buying a call option is still giving you exposure to the underlying asset. You're not hedging your position, you're just adding to it.
    thanks, yes, i thought that was the case, but im confused because does the statement refer to owning the asset (Asset A) and buying a call on the exact same asset (Asset A)? or does it simply mean you own an asset (shares in company X) and buy a call on the same 'kind' of asset (ie shares in company Y)? thanks
 
 
 
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