What Are the Potential Risks Associated with Trading Options? - Transcript
The risks on a covered call strategy are the risk of losing the stock that you own and facing the consequences of that risk whether there be tax consequences losing a position you really wanted to hold having to uh to Forfeit on premiums if you’re not using options that you’re buying the real risk is around naked uh call writing so that means you don’t have the stock and you really need to go into the marketplace and buy the stock so if it’s a call you have to go in and buy it in a rising market and there’s no ceiling on how high the price could go I within reason um if it’s a put you know you may be buying something that is going to go to zero so you may lose a hundred percent of whatever the investment is and you could lose a lot more in options writing than you’ve invested in the options so those are real risks it is a betting strategy.