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CMFASPrepStudyingRES5
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Financial advisory
RES5Financial Advisory Services✓A fund selling (writing) a naked (uncovered) call option is exposed to:
An uncovered short call obliges the writer to deliver the underlying at the strike no matter how high the price climbs, so losses are theoretically unlimited - which is why cover rules restrict such uncovered positions in retail funds.
The premium is the maximum GAIN for a call writer, not the maximum loss; naked-call losses are unbounded.
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