Maximum Loss When Buying vs Selling Options on Pluang
The maximum loss when buying options on Pluang is the premium you paid plus the fees on your opening and closing (or force-close) transactions — you cannot lose more than that, even if the underlying moves sharply against you. Selling (writing) an option carries a fundamentally different and considerably higher risk profile. On Pluang every short position must be covered: a short call by 100 shares of the underlying per contract that you already hold, and a short put by cash set aside at the strike price × 100 per contract. A covered call seller gives up any gain above the strike and still carries the risk of the shares falling, while a put seller's maximum loss is large but finite, bounded by the underlying falling all the way to zero minus the premium already received. Because Pluang's US Stock Options are American-style, a short position can also be assigned by the counterparty at any point before expiry, not only on the expiry date itself — so a seller's maximum-loss scenario can play out earlier than a buyer's ever could.
| Position | Maximum loss | What determines it |
|---|---|---|
| Buying a call or put | Premium paid plus fees | Set when you open the trade — if the option ends worthless, you lose the premium plus the transaction fee, regulatory fees and VAT on the opening and closing (or force-close) trades, no more. |
| Selling (writing) a covered call | A fall in the value of the shares you hold, offset only by the premium | You must hold 100 shares per contract. If the price rises above the strike, you deliver those shares at the strike price and give up the gain above it, rather than facing an open-ended loss. Naked calls, where the loss is theoretically unlimited, are not available on Pluang. |
| Selling (writing) a cash-secured put | Large but finite | Worst case is the underlying falling to zero — you're obligated to buy at the strike price, with the cash you set aside, when the asset is worthless. |
- Collateral reflects the asymmetry. Because sellers face much larger potential losses than buyers, Pluang requires every short position to be covered: 100 shares per contract for a short call, or cash set aside at the strike price × 100 per contract for a short put. Buyers only pay the premium and fees upfront — no collateral is required to buy.
- Early assignment is a real risk for short positions. Pluang's US Stock Options are American-style, meaning a short call or put can be assigned by the counterparty at any point before expiry — not only at expiry. This means a seller's maximum-loss scenario can materialize earlier than the expiry date. If you are assigned, your collateral covers the obligation: your shares are delivered on a short call, or your reserved cash buys the shares on a short put.
- Both sides can close before the maximum-loss scenario plays out. Buyers can sell to close, and sellers can buy to close, exiting the position before expiry rather than waiting for the worst case to unfold.
Related questions:
Q: If I buy an option on Pluang and it expires worthless, what exactly do I lose?
You lose the full premium you paid to open the position plus the fees on the opening and closing (or force-close) transactions: the transaction fee, the JFX and KBI fee, regulatory fees and VAT. Nothing more, and no collateral is ever required for a long option. Because your maximum loss is known the moment you enter the trade, there is no scenario where you owe additional funds if the underlying moves against you, no matter how far it falls or how long you hold the position until expiry.
Q: Can I limit my loss as an options seller on Pluang?
Yes — on Pluang this is built into how short positions work. A short call must be covered by 100 shares per contract that you already hold, and a short put by cash set aside at the strike price × 100 per contract, so you can always meet the obligation if you are assigned. You can also close a short position before expiry with a buy-to-close order, which ends your obligation.
Q: Can my short option position be assigned before its expiry date, and does that change my maximum loss?
Yes — Pluang's US Stock Options are American-style, so a short call or put can be assigned by the counterparty at any point before expiry, not only on the expiry date. Assignment itself doesn't change your theoretical maximum loss, but it can convert that loss into a realized one earlier than expected, since assignment forces immediate settlement at the strike price rather than letting the position run until expiry.