What are the main risks of Short Options?

The main risks of Short Options include:

1. Unlimited Loss Risk on Short Calls
   Scenario: You sell a Call Option on a stock with a Strike Price of $100 and hope the stock price will stagnate or fall.
   Risk: If stock price rises to $150, the buyer will exercise his contract, and the seller will be obliged to sell the shares at $100. This results in a loss of $50 per share.
   The stock price can theoretically continue to rise indefinitely, the potential loss on a short call is unlimited.

2. Huge Loss Risk on Short Puts
   Scenario: You sell a Put Option on a stock with a Strike Price of $100 and hope the stock price will remain stagnant or rise.
   Risk: If the stock price falls to $50, the buyer will exercise his contract, and the seller will be obliged to buy the stock at $100, resulting in a loss of $50 per share.
   The maximum loss occurs if the stock price falls to $0, which is $100 per share.

3. Risk Assignment
   Assignment occurs when the buyer executes an options contract, so the seller is obliged to fulfill his obligations according to the type of options sold.

4. Margin Call / Collateral Risk
   Options sellers are required to provide shares (at least 100 shares per contract) and/or cash as collateral. If an assignment occurs, this collateral can be used to fulfill the transaction obligation.