What Is the Maximum Loss Potential When Selling an ‘Uncovered’ Call Option?

The maximum loss potential when selling an uncovered (or naked) call option is theoretically unlimited. A call option gives the buyer the right to purchase the underlying asset at the strike price.

If the asset's price rises indefinitely, the seller is obligated to buy the asset at the market price and sell it to the buyer at the lower strike price, resulting in a loss that grows with the asset's price.