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What option strategy (e.g. long put, short put, long call, short call) has the greatest risk...

What option strategy (e.g. long put, short put, long call, short call) has the greatest risk of loss? Explain

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Answer #1

Answer

SHORT CALL OPTION

Usually short call option has the unlimited loss. When we short a call option we have unlimited risk of loss. Short call option gives the trader the right to sell but there is no obligation. Short call is a bearish trading strategy and here they are trying to make profit from the sudden decline of the market. So there wil be more risk is associated with these Short call option strategy. When we are comparing the short call with long put, short put and long call we can underatnd here incase of short call there is unlimited liability and chance of earnings from fluctuation is also high. These are not limited in case of risk.

ThankYou........

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