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The total risk is 2k. So, the puts could end up worthless at the expiry date.

• voidmain0001 7y ago
  "Naked selling of put options can be quite dangerous in the event of a steep fall in the price of a stock. The option seller is forced to buy the stock at a certain price. However, the lowest the stock can drop to is zero, so there is a floor to the losses." https://www.investopedia.com/ask/answers/050115/what-types-options-positions-create-unlimited-liability.asp https://www.investopedia.com/ask/answers/050115/what-types-o...
  • sirsar 7y ago
    OP is buying puts, not selling them.
  • outworlder 7y ago
    "naked" "selling" OP is doing neither.
  • sdinsn 7y ago
    He's buying puts, not selling them. You think market is going down: Buy puts, sell calls You think market is going up: Sell puts, buy calls Maximum loss when buying is only your investment.