You can lose all of the money committed to an options position. Some short-option and futures-related positions can create losses greater than the initial amount received or invested.
No investment advice
All material is general education, not individualized advice, a trade signal, a solicitation, or a guarantee of results. Options America does not know your financial situation, objectives, experience, tax position, or risk tolerance.
Key trading risks
- Leverage: small market moves can create large percentage gains or losses.
- Expiration and time decay: an option can lose value and expire worthless.
- Assignment and exercise: short positions may be assigned, including before expiration, and can create stock, cash, or margin obligations.
- Liquidity and execution: wide bid-ask spreads, low volume, volatility, halts, and slippage may prevent execution at an expected price.
- Volatility and model risk: implied volatility, Greeks, probabilities, and pricing models are estimates, not promises.
- Futures options: contract specifications, settlement, leverage, and margin can differ materially from equity options.
Examples and performance
Examples may be simplified, hypothetical, delayed, or based on assumptions. They may omit commissions, fees, taxes, slippage, margin changes, early assignment, and other real-world effects. Hypothetical results do not represent actual trading and past performance does not guarantee future results.
Your responsibility
Before trading, review the product documents and your broker's rules, understand the maximum potential loss and margin requirements, and consider advice from licensed financial, legal, and tax professionals. Use only risk capital you can afford to lose.
Required options disclosure
Before buying or selling exchange-traded options, read the Options Clearing Corporation's Characteristics and Risks of Standardized Options. Approval by a broker does not make a strategy suitable or safe.