# Option risks

- Canonical URL: https://www.gerhardmerk.de/option-risks
- Post ID: 590534
- Modified: 2023-07-25T21:12:19+00:00
- Language: en

## Definition

In forward sales, the underlying must be delivered at the originally agreed price even if the price of the underlying has risen above the agreed price since the contract was concluded. However, because the price of the underlying asset can theoretically rise without limit, the potential loss is also unlimited and can be considerably higher than the margin requirements. - In the case of forward purchase, the underlying must be taken over at the originally agreed price even if the price of the underlying has fallen far below the agreed price since the contract was concluded. The risk of loss therefore lies in the difference between these two values. In the worst case, there is a risk of a loss in the amount of the originally agreed price. - See hedge ratio, market, inverse, OTC option, sleepy warrant. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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