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What Is the Primary Risk When ‘Writing’ or ‘Selling’ an Uncovered Call Option?

Unlimited potential loss, as the seller is obligated to sell at the strike price while the market price can rise infinitely.
Greeks.Live07.11.25

What Is the Primary Risk When ‘Writing’ or ‘Selling’ an Uncovered Call Option?

The primary risk is unlimited potential loss. When a Call is sold 'uncovered' (without owning the underlying asset), the seller is obligated to sell the asset at the strike price, no matter how high the market price rises.

Since there is no theoretical limit to how high a price can go, the potential loss is infinite.

Why Does a Short Call Option Have Theoretically Unlimited Loss Potential?
What Is ‘Short Selling’ an Option, and Why Does It Require Margin?
What Is the Risk Profile of a “Naked” or Uncovered Call Option?
What Is the Primary Risk When Writing (Selling) a Naked Call Option?

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