Risk Disclosure
Options trading may result in the total loss of principal. Before continuing to use Hyperstock, please read and fully understand the following risks.
Options are complex financial instruments involving significant risk and are not suitable for all investors. Past performance does not guarantee future results. You should carefully decide whether to engage in options trading based on your financial situation, investment experience, and risk tolerance.
All data and analysis results on Hyperstock are provided for reference only. They do not constitute investment advice, buy or sell recommendations, or endorsement of any investment strategy.
1. Market Risk
Option prices are affected by many factors, including underlying asset price movements, market supply and demand, macroeconomic conditions, and geopolitical events, and may fluctuate sharply.
Special risks of Sell Put strategies: If the underlying asset price falls sharply, your loss may far exceed the premium received. In theory, when the underlying asset price falls to zero, the maximum loss on a Sell Put = (strike price × number of shares) − premium received.
2. Assignment Risk
After you sell a Put option, if the underlying asset price is below the strike price at expiration, you will be obligated to purchase the underlying asset at the strike price (100 shares per contract).
Please ensure that:
- You have sufficient funds to meet assignment obligations
- You are willing to hold the underlying asset at the strike price
- You understand that the stock price may continue to decline after assignment
3. Margin Risk
Options trading typically requires margin. When market volatility causes your margin to become insufficient, you may face margin calls or forced liquidation.
Margin policies vary by broker and may change at any time. SPAN margin estimates provided by Hyperstock are for reference only; please refer to your broker's actual requirements.
4. Liquidity Risk
Some option contracts (especially deep out-of-the-money or far-dated contracts) have low trading volume and may present liquidity risk, including wide bid-ask spreads and difficulty closing positions.
5. Volatility Risk
Changes in implied volatility (IV) directly affect option prices:
- IV rises → Put option prices rise → Sell Put strategies may show unrealized losses
- IV crush (volatility collapse) → Option prices fall rapidly → Favorable to sellers, unfavorable to buyers
You may face short-term unrealized losses due to rising IV even if the underlying asset price has not fallen significantly, despite having received premium.
6. Earnings and Event Risk
Earnings releases, major corporate announcements, industry policy changes, and black swan market events may cause the underlying asset price to move sharply in a short period.
Our recommendation: Do not open new Sell Put positions within two (2) weeks before earnings releases.
7. Limitations of AI Analysis
Important: Please fully understand the limitations of AI analysis.
- AI models are based on historical data and statistical methods and do not predict future market movements
- AI models have inherent limitations, including model bias, data noise, and overfitting
- Changes in market structure, trading rules, and the macro environment may cause historical patterns to fail
- You should not rely solely on Hyperstock analysis results when making investment decisions
The AI Score is a simplified metric that combines multiple dimensions into a single number. It cannot capture all factors affecting option prices and cannot predict black swan events.
8. Technical Risk
- The Platform may experience service delays or interruptions due to network failures, system maintenance, or third-party data outages
- Data updates may be delayed; analysis results reflect market conditions at the time the data was generated
- We do not guarantee continuity, timeliness, security, or absolute accuracy of the Services
The following suggestions cannot eliminate risk but may help you manage it more effectively:
| Recommendation | Description |
|---|---|
| Understand options thoroughly | Before trading, ensure you understand basic option mechanics, profit/loss structure, and risk characteristics |
| Control position size | Keep margin allocated to a single underlying at no more than 10% of total capital |
| Diversify | Do not concentrate all capital in a single underlying or industry |
| Maintain cash reserves | Keep at least 30% of capital in cash to meet assignment and add-on needs |
| Monitor assignment probability | Select contracts with lower assignment probability (< 5%) to reduce assignment risk |
| Avoid earnings periods | Do not open new positions within 2 weeks before earnings; consider closing or rolling existing positions |
| Set stop-loss levels | Close positions promptly when unrealized losses reach your preset threshold |
| Keep learning | Track market developments and understand your position risk exposure |
| Consult professionals | If in doubt, consult a licensed investment adviser |
If you do not understand any of the risks described above, please do not use the Services or engage in options trading.
Options trading is not suitable for everyone. Before participating, please ensure that you:
- Fully understand how options work and the associated risks
- Are able to bear the possible total loss of principal
- Have consulted a qualified financial professional
If you have any questions about this risk disclosure, please contact: