Varying Levels of Options Risk
Some options contracts carry more risk than others. In general, purchasing options is less risky than writing them because you're only at risk for losing the premium you pay when you buy. If you sell an uncovered call, on the other hand, you risk having to purchase the stock in the secondary market, regardless of its market price, before selling the shares to the option holder at the strike price. Because there isn't any limit on how high a stock's price can rise, selling uncovered calls presents an unlimited level of risk.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options (available at your local Scottrade branch office or from the Options Clearing Corporation at 1-888-OPTIONS or by visiting www.888options.com). All option accounts require prior approval by Scottrade. Market volatility, volume, and system availability may impact account access and trade execution. Supporting documentation for any claims will be supplied upon request.