What Is the Primary Risk for a Short Seller of a Naked Call Option?

The primary risk for a short seller of a naked call option is theoretically unlimited loss. A naked call is sold without owning the underlying asset.

If the underlying asset's price rises significantly, the seller is obligated to sell the asset at the strike price, but must first buy it on the open market at the much higher current price. Since there is no upper limit to how high a stock price can go, the potential loss is unlimited, making this a high-risk strategy.