SIE practice questionhardOptions Strategies
Which of the following options strategies exposes an investor to unlimited loss potential?
- ASelling covered call options
- BBuying call options
- CSelling uncovered call options✓ Correct answer
- DBuying put options
Explanation
Why C — Selling uncovered call options
Selling uncovered (naked) calls exposes investors to unlimited loss if the stock rises. Buying calls/puts limits loss to the premium, and covered calls limit risk to the difference between strike and initial cost.
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