The most the investor who sells a naked stock index option can lose is the cost of the option.

Name: The most the investor who sells a naked stock index option can lose is the cost of the option.
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Question

The most the investor who sells a naked stock index option can lose is the cost of the option.

Quizplus · Accepted Answer

Selling a naked stock index option exposes the seller to potentially unlimited losses, as they are obligated to fulfill the contract at the settlement price if the option is exercised against them, and there's no cap on how high the index can rise (for a call) or fall (for a put).

The Most the Investor Who Sells a Naked Stock Index