Part 8 Trading Master Class With Experts

Risks in Option Trading

While options offer great potential, they also come with risks, especially for sellers.

Time Decay: The value of an option decreases as it nears expiry.

Volatility Risk: Unexpected drops in volatility can reduce premium value.

Unlimited Loss (for Writers): Option sellers can face huge losses if the market moves sharply against them.

Complexity: Understanding option behavior and Greeks requires knowledge and experience.

Therefore, beginners should start small and practice on demo accounts or low-risk strategies before committing large capital.