Renko options trading as a method can include selling options for income that are not covered trades.
Short options can be sold as part of a long call-short put or short call-long put synthetic option position to trade the underlying.
Again, the short options in these Renko options trading positions would be uncovered.
Renko Short Options Assignment Risk
Selling options, or being naked short options, have risks besides a loss of money on losing trades. We mitigate some risk by selling options on ETFs that will not be bought out. We are not selling naked calls on stocks.
However, you also have risks from the short options being assigned.
Assignment risk can lead to you becoming long or short the underlying, which is not what you intended from a short option income trade.
If your account does not have the necessary funds and assets to support the new position, you can receive a margin call to make up the deficit. If you do not increase your account size, the position can be liquidated regardless of the size of the loss.
Disclaimer From Charles Schwab
“Please note that options trading involves significant risks and is not suitable for everyone. Certain requirements must be met to trade options through Schwab. Not all clients will qualify. Naked options strategies involve the highest amount of risk and are only appropriate for traders with the highest risk tolerance.”
Understand Your Risks Before Selling Options
It is unnecessary to sell uncovered options to trade the Renko option strategies; they are an addition to the method that can be effective. But the risks must be understood.
Short options risks are a continued focus. Do not sell uncovered options without understanding all the risks involved.
Renko Chart Trading Members
Renko Chart Options Position Trading
