Part 1 Intraday Master Class

Risks in Options Trading

Although options offer leverage, they come with risks:

1. Time Decay (Theta Loss)

Options lose value as expiry approaches.

2. Volatility Crush

Premiums drop sharply when IV falls.

3. Unlimited Loss for Sellers

Selling naked calls/puts is extremely risky.

4. Liquidity Risk

Illiquid options have high spreads, causing slippage.

5. Sudden Market Swings

Gaps and news events can invalidate strategies.

Proper risk management is essential.