The
largest risk associated with options comes with writing uncovered
positions. An uncovered option is one that you write
without owning the underlying stock, in the case of a call,
or without securing the amount of money you'll need to purchase
the stock, in the case of a put.
Uncovered positions are extremely risky, since
if the price of the underlying stock rises dramatically, in the
case of a call, or falls dramatically, in the case of a put, you
could be forced to lay out a significant amount of cash to purchase
the stock.
Maximum profit
Maximum loss
Naked
call writing
Premium received
Naked
put writing
Premium received
Significant,
but limited to the amount you’d have to deliver if the
stock price fell to $0
