Options Risks

Options can lose value fast, and some positions carry unlimited risk. Here are the main risks for buyers and sellers, how assignment works and a checklist before placing any options trade.

Risks for buyers

• Losing 100% of the premium if the option expires worthless.
• Being right on direction but wrong on timing.
• Volatility crush after events.
• Wide bid-ask spreads in thinly traded options.

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