2. As a word of caution option writer has a higher risk of losing money as his risk is higher as he is obligated to take or provide the delivery and if trend reverses the option writer is under a lot of tension and financial constraint. Thus this portfoli is restricted to the professionals and do not venture in this arena unless you are a professional option writer or has sufficient financial depth to bear the loss. Moreoer remember that option writers have to be satisfied with lower returns per transaction.
Writing Options: Higher risk higher reward
Posted By On 10/18/2008 07:47:00 AM Under Option Writing2. As a word of caution option writer has a higher risk of losing money as his risk is higher as he is obligated to take or provide the delivery and if trend reverses the option writer is under a lot of tension and financial constraint. Thus this portfoli is restricted to the professionals and do not venture in this arena unless you are a professional option writer or has sufficient financial depth to bear the loss. Moreoer remember that option writers have to be satisfied with lower returns per transaction.