DEFINITION of 'Unlimited Risk'

The risk of an investment that has unlimited downside potential.

BREAKING DOWN 'Unlimited Risk'

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.

  1. Unlimited Liability

    An unlimited liability is a type of business where owners share ...
  2. Frontspread

    A type of options spread in which a trader holds more short positions ...
  3. Country Risk

    A collection of risks associated with investing in a foreign ...
  4. Short Sale

    A short sale involves borrowing shares in anticipation of a price ...
  5. Short Selling

    Short selling is the sale of a security that is not owned by ...
  6. Unlimited Bond Purchase

    A program undertaken by the European Central Bank in October ...
Related Articles
  1. Investing

    T-Mobile: Unlimited Data Plans Not Here to Stay

    Consumers with unlimited data plans are proving themselves to be heavy users, undermining the profitability of the concept. However, it is not the current subscribers who are the issue but the ...
  2. Investing

    3 Reasons to Use ETF Options Over Futures (SPY, QQQ)

    Learn about exchange-traded fund (ETF) options and index futures, and why it might be a better decision to use ETF options instead of futures.
  3. Insights

    Verizon Launches Unlimited Data Plan

    Verizon has launched a new unlimited data plan to rival Sprint and T-Mobile's.
  4. Small Business

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
  5. Investing

    Short Selling Risk Can Be Similar To Buying Long

    If more people understood short selling, it would invoke less fear, which could lead to a more balanced market.
  6. Investing

    Verizon, AT&T Move to End Old Unlimited Plans

    The two leading carriers will restrict older plans in order to get users into new unlimited plans.
  7. Investing

    Sprint Improves Its Unlimited Offer Once Again

    With all four major wireless carriers now offering unlimited data plans again, pressure has increased on fourth-place Sprint find new ways to stand out from the pack. The company has tweaked ...
  8. Financial Advisor

    Why You Should Never Short a Stock

    Short selling a stock means you are betting on the stock decreasing in price. Before taking on this investment, you should fully understand the risks
  9. Trading

    Difference Between Short Selling And Put Options

    Short selling and put options are used to speculate on a potential decline in a security or index or hedge downside risk in a portfolio or stock.
  1. What risks does a business owner face under a business structure with unlimited liability?

    Understand the types or risk a business owner faces under a business structure with unlimited liability. Learn why a business ... Read Answer >>
  2. How does one make money short selling?

    Short sellers make money by betting a stock they sell will drop in price. If it drops, the short seller buys it back at a ... Read Answer >>
  3. Short Selling, or Selling Something You Don't Own

    Money can be made without actually owning any shares, but short selling isn't for new investors. Read Answer >>
  4. What sectors have higher exposure to inherent risk?

    Learn how inherent risk in certain sectors, such as financial services, banking, energy and utilities, can pose significant ... Read Answer >>
  5. How can you lose more money than you invest shorting a stock? If you have no money ...

    The simple answer to this question is that there is no limit to the amount of money you can lose in a short sale. This means ... Read Answer >>
  6. What are some examples of inherent risk?

    Read about the nature of inherent risk in preparing and executing financial audits, including some common situations that ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center