What Is the Primary Risk When a DAO Sells a Naked Put Option?

A naked put option is sold without the seller holding the necessary cash or short position to cover the obligation if the option is exercised. The primary risk for the DAO is unlimited downside exposure if the underlying asset's price drops significantly below the strike price.

If the buyer exercises the put, the DAO is obligated to purchase the asset at the strike price, which is now higher than the market price, potentially leading to massive losses for the treasury.