Sentences with phrase «unlimited risk which»

However, option selling involves theoretically unlimited risk which might endanger the performance of the option strategy in the long run should an option seller find himself at the wrong place, at the wrong time.

Not exact matches

The writer has unlimited risk and a limited profit potential, which is the premium of the option minus commissions.

Risks associated with derivatives (including «short» derivatives) include losses caused by unexpected market movements (which are potentially unlimited), imperfect correlation between the price of the derivative and the price of the underlying asset, increased investment exposure (which may be considered leverage), the potential inability to terminate or sell derivatives positions, the potential need to sell securities at disadvantageous times to meet margin or segregation requirements, the potential inability to recover margin or other amounts deposited from a counterparty, and the potential failure of the other party to the instrument to meet its obligations.

So while it can provide a trader with the opportunity for unlimited profits, it carries with it a enormous level of risk which all forex brokers are required by law to warn their clients about.

The reason is that there are so many risks: government regulations of short - selling (SEC Rule 204), special government regulations put in place during market panics (e.g. the 2008 SEC ban on short selling financials), forced buy - ins, unlimited losses, debt to the brokerage, interest one is charged for being short which can vary arbitrarily, brokerages could change margin requirements to any arbitrary amount, arbitration clauses, you agree to indemnify the brokerage for anything it did even if it did the wrong thing, some brokerages also do market - making and thus have further incentive to fleece the client, and all the other «screw you» legal language that you agreed to when opening an account.

Federated Prudent Bear Fund regularly makes short sales of securities, which involves unlimited risk including the possibility that losses may exceed the original amount invested.

The sensationalist news media provides unlimited access to images of brutality and human suffering, which put our humanity at risk daily.

Model # 4 — Business entities providing both legal and non-legal services (except those identified as posing a regulatory risk) in which individuals and entities who are not licensed by the Law Society would be permitted unlimited ownership.