Uncovered Call Writing Risks

Don't forget the importance of risk assessment in determining what is an appropriate investment or strategy. Consider the risks involved with writing uncovered calls, especially in light of limitations that are placed on your activity by brokerage firms. These limitations are necessary due to the risk of potential losses. Restrictions that are placed on naked call writing limit your ability to participate in the high-risk end of this market.

The risks of uncovered call writing include the following:

Smart Investor Tip

It is smart to know all of the risks involved with uncovered call selling. Not knowing can lead to some very expensive surprises.

By Michael C. Thomsett
Michael Thomsett is a British-born American author who has written over 75 books covering investing, business and real estate topics.

Copyrighted 2020. Content published with author's permission.

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