The spring will have maximum potential energy when it is either pulled out (extended) or compressed. Therefore, the correct answer is C) both (A) and (B).
In both cases, the spring is being deformed from its equilibrium position. When the spring is pulled out or extended, it stores potential energy due to the stretching of its coils. Similarly, when the spring is compressed, it stores potential energy due to the compression of its coils. The potential energy stored in the spring is directly proportional to the amount of deformation or displacement from its equilibrium position. So, the more the spring is extended or compressed, the greater the potential energy it possesses.