The risk of an investment that has unlimited downside potential.
Investopedia Says:
Examples of investments with inherent unlimited risk include short positions and futures contract trading. In short selling or trading futures contracts, the potential to lose more than your initial investment is theoretically infinite.
Related Links:
Compare naked strategies to credit spreads and see if the unlimited risk of going naked is worth it. To Limit or Go Naked, That Is the Question
Find out what margin is, how margin calls work, the advantages of leverage and why using margin can be risky. Margin Trading
Have you ever correctly predicted a stock's decline or wondered how to be profitable in a bear market? Find out how and the risks involved. Short Selling Tutorial
