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The risk, however, lies with the broking platform used to execute and manage the strategy. It has been a strategy employed by retail traders to institutional fund managers since the inception of the Options market and continues to be one of the more common options based strategies used by traders. Of course, it would be much better if you were to make a detailed comparison of various certified brokers, so that you would really be able to choose the best of the best. Any CFDs broker that has received such certification is definitely worthy of your consideration, and you could definitely do worse than simply go with the first certified CFDs broker that you find. Therefore, it is imperative you watch your positions closely in case you are left with a naked option and you get exercised. A CFDs broker earns money by charging a commission on each trade you make and some also charge other related fees. The risk, however, lies with the broking platform used to execute and manage the strategy. This scenario is the maximum risk associated with the strategy. While low margin requirements are typically considered a good thing, they can also be a bad thing when viewed from a different angle. Well, much the same way as the traditional Buy/Write strategy works although in this strategy, you write the option on a parcel of CFDs rather than unleveraged stock. This strategy could also be used with brokers who offer guaranteed stop losses but even you have bought a guaranteed stop loss, this only protects you against significant gaps in the market, and could still potentially leave you with a naked option. Margin requirements are related to leverage trading, which is essentially trading on borrowed money. Where am I going with all of this? You should never trade beyond your ability to finance the trades, because otherwise you might find yourself in a position where, because of leverage trading, you lose more than you can actually afford.
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