Part 9 Trading Master Class With Experts

Risks in Option Trading Strategies

Options offer flexibility, but risks vary.

1 Premium Decay

Option buyers lose premium rapidly as expiry approaches.

2 Volatility Crush

IV drops after major events → huge loss for long straddle/strangle buyers.

3 Assignment Risk

Short options may be assigned early in American-style options.

4 Unlimited Loss Potential

Selling naked options exposes traders to large losses.