The writer of a call option is theoretically exposed to an unlimited loss.

Question

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The writer of a call option has the obligation to sell the underlying asset at the strike price if the option is exercised. If the market price of the asset rises significantly above the strike price, the writer must fulfill the contract at a potentially much lower price, leading to an unlimited loss as the market price can theoretically rise indefinitely.

The Writer of a Call Option Is Theoretically Exposed to an Unlimited