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What Is the Primary Risk for the Seller (Writer) of a Naked Call Option?

The primary risk is unlimited loss potential. When selling a naked call, the writer does not own the underlying asset.

If the asset's price rises significantly above the strike price, the seller is obligated to buy the asset at the high market price and sell it at the lower strike price to the option holder. This upward movement has no theoretical limit, leading to catastrophic losses.

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