Uncovered Options Trading System
Basis Risk: Basis Risk is the risk associated with an unexpected widening or narrowing of basis between the time a hedge position is established and the time that it is lifted.
Counterparty Risk: Counterparty Risk is the risk associated with the financial stability of the party entered into contract with. Forward contracts impose upon each party the risk that the counterparty will default, but futures contracts executed on a designated contract market are guaranteed against default by the clearing organization.
Exchange Risk Factor: Exchange Risk Factor is the delta of an option as computed daily by the exchange on which it is traded.
Exchange Risk Factor: Exchange Risk Factor is the delta of an option as computed daily by the exchange on which it is traded.
Systemic Risk: Systemic Risk is the risk that a default by one market participant will have repercussions on other participants due to the interlocking nature of financial markets. For example, Customer A's default in X market may affect Intermediary B's ability to fulfill its obligations in Markets X, Y, and Z.
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Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.