Cryptocurrency Q&A
What is the riskiest option strategy?
What is the riskiest option strategy?
Tommaso
Sat Dec 14 2024
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7 answers
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I'm considering employing option strategies in my investments and I want to understand which one carries the highest risk. I'm aware that high risk could potentially lead to high returns, but I need to know what I'm getting into. What is the most dangerous, or riskiest, option strategy?
7 answers
Martina
Mon Dec 16 2024
The riskiest option strategy involves selling call options on a stock that is not owned.
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benjamin_stokes_astronomer
Mon Dec 16 2024
This practice is commonly referred to as writing a naked call or selling an uncovered call.
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Silvia
Mon Dec 16 2024
When an investor sells a call option without owning the underlying stock, they are essentially betting that the stock's price will not rise above the strike price.
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Davide
Sun Dec 15 2024
If the stock's price does rise above the strike price, the investor faces significant risk.
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Alessandra
Sun Dec 15 2024
In this scenario, the option holder has the right to buy the stock from the investor at the strike price, which is now below the market price.
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