Options accounts & routing
What are the operational risks of executing a ratio write strategy in a standard non-portfolio margin account?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
In a standard non-portfolio margin account, a ratio write (selling more options than the underlying shares or long options covering them) creates an uncovered component requiring substantial Reg T-style margin and carries undefined risk on the uncovered portion.
How it works
Because only part of the short options are covered, the uncovered contracts are margined as naked options, consuming significant buying power and exposing the account to unlimited loss on adverse moves beyond the covered ratio.
An example
A 2x1 ratio call write against 100 shares covers one short call but leaves the second short call fully naked, requiring separate uncovered call margin on that extra contract.
Risk & limitations
The uncovered portion's loss potential is theoretically unlimited for ratio call writes, and brokers can issue margin calls or force liquidation as the underlying rallies sharply.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.