ICICI Bank Limited
Educacional

Part 4 Institutional Trading

39
Risks in Option Trading

While options offer leverage and flexibility, they also carry risks:

Time Decay: Option value reduces as expiry nears.

High Volatility: Can cause large swings in option prices.

Unlimited Loss (for sellers): Writers face potentially infinite risk.

Complexity: Requires understanding of multiple factors like Greeks, volatility, and time.

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