With covered options if the option gets exercised you have only an opportunity cost. For example the option is at $10 the stock goes to $15 and is exercised. You get the $10 and the option premium (say $2). So you end up with $12. If you had just held the underlying stock you could have sold it for $15 yourself, thus a $3 opportunity cost. Big sellers deal on a statistical basis, just like insurance companies, so this should all be allowed for in the cost of the option itself.

Naked options are another matter. In this case you can lose more than you invested. This isn't investing it's gambling.

Policies not Politics
---- Daily Landscape