Limited Risk

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Dictionary Says

Definition of 'Limited Risk'

The risk of an investment that has a predetermined maximum downside potential, which is usually the initial amount invested.
Investopedia Says

Investopedia explains 'Limited Risk'

When choosing a limited-risk investment, the investor is fully aware of the potential amount he or she could lose. For example, entering into a long position in a stock has limited risk because the investor can lose no more than the initial amount invested. Similarly, option contracts have limited risk as only the initial premium paid for the option can be lost.

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'Limited Risk'

  • Agency Bonds: Limited Risk And Higher Return

    http://www.investopedia.com/articles/bonds/07/agency_bonds.asp
    Agency Bonds: Limited Risk And Higher Return. March 13 2010 | Filed Under ยป
    Bonds, Fixed Income, Taxes. In the world of fixed-income ...

  • Should Your Options Go Naked?

    http://www.investopedia.com/articles/optioninvestor/05/010505.asp
    ... Here we explore this question by comparing the selling of naked options on the S&P
    500 to limited-risk credit spreads, looking at the difference in SPAN margin ...

  • Bear Put Spreads: A Roaring Alternative To Short Selling

    http://www.investopedia.com/articles/optioninvestor/09/bear-vertical-put-spread.asp
    ... The bottom line is that the buyer of a put option has limited risk and essentially
    unlimited profit potential (profit potential is limited only by the fact ...

  • Vertical Bull and Bear Credit Spreads

    http://www.investopedia.com/articles/optioninvestor/02/041202.asp
    This trading strategy is an excellent limited-risk strategy that can be
    used with equity as well as commodity and futures options. ...

  • Backspreads: Good News For Breakout Traders

    http://www.investopedia.com/articles/optioninvestor/05/backspreads.asp
    This bullish trading strategy offers unlimited potential profit with limited risk. ...

  • Trading The QQQQ With In-The-Money Put Spreads

    http://www.investopedia.com/articles/optioninvestor/05/TradingQQQQ.asp
    ... Here we look at a trade that can be used for trading a bullish outlook with a limited
    risk options credit spread, which can be substituted for buying options. ...

  • Should You Flock To Iron Condors?

    http://www.investopedia.com/articles/trading/08/flock-to-iron-condors.asp
    ... find quite comfortable. This option strategy also allows you to own positions
    with limited risk and a high probability of success. ...

  • Trading The QQQQ With In-The-Money Put Spreads

    http://www.investopedia.com/articles/optioninvestor/05/tradingqqqq.asp
    ... Here we look at a trade that can be used for trading a bullish outlook with a limited
    risk options credit spread, which can be substituted for buying options. ...

  • What Is Your Risk Tolerance? Slideshow | Investopedia

    http://www.investopedia.com/slide-show/risk-tolerance
    ... t work out. Investors with a higher net worth can afford to take on more
    risk than those with limited risk capital. If you are in ...

  • Cut Down Option Risk With Covered Calls

    http://www.investopedia.com/articles/optioninvestor/071201.asp
    ... Because it is a limited risk strategy, it is often used in lieu of writing calls
    "naked" and, therefore, brokerage firms do not place as many restrictions on ...

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