Uncovered (Naked) Option Writing

What this video covers

• Why uncovered call writing is the single highest-risk options strategy, with unlimited loss potential when the stock rises above the strike
• The breakeven formula for uncovered calls (strike price plus premium received) and why the writer only loses money past that point
• Why uncovered put writing has limited risk (stock can only fall to zero), and how strike minus premium received serves two different meanings as breakeven versus maximum loss
• How ratio call writes create unlimited upside risk the moment you write more calls than your shares cover, despite owning stock
• Cash settlement mechanics for uncovered broad-based index options, including the $100 multiplier and notional value calculation
• Why European-style exercise on index options only eliminates early assignment surprise, not the underlying risk at expiration
• The inverted relationship in yield-based options: yield-based calls profit when bond prices fall and yields rise, and how to read the decimal-shifted strike prices