Risk Disclosure

1.Purpose of this document

QuantMint provides analytical and decision-support tools for options traders. This Risk Disclosure explains the principal risks of trading options generally, and the principal limitations of the analytics that QuantMint produces. It supplements the OCC's Options Disclosure Document — it does not replace it. You are responsible for reading the ODD and discussing any material risk you do not understand with your broker, a qualified investment professional, or both.

2.General risks of options trading

Options are leveraged derivative contracts whose value depends on the price and volatility of an underlying security or index. The following risks apply to most options trading and are not exhaustive:

• Loss of principal. You can lose 100% of any premium you pay for a long option, and a single position can produce a total loss in days or hours.
• Unlimited or large losses. Some short-option strategies (such as naked short calls) carry theoretically unlimited risk. Others (such as iron condors, vertical spreads, or covered calls) cap the loss but the cap can still be many times the credit received.
• Leverage. Small movements in the underlying can produce large percentage moves in the option, in either direction.
• Time decay. Options lose extrinsic value as expiration approaches. A position can be correct on direction and still lose money to theta.
• Volatility risk. Implied volatility can rise or fall sharply around earnings, macro events, or shocks. A position can be hurt by a vol move even if the underlying does nothing.
• Liquidity risk. Bid-ask spreads can widen, market depth can disappear, and you may not be able to enter or exit at displayed prices, especially in less-liquid names, far-dated strikes, or after hours.
• Gap risk. Underlying prices can gap overnight or intraday on news, halts, or earnings; stops and modeled probabilities cannot prevent gap losses.
• Pin risk. Near expiration, a small move can change a position from out-of-the-money to in-the-money, with substantial P&L consequences.
• Counterparty and clearing risk. Although standardized options are cleared by the OCC, broker insolvency, system outages, and operational errors can still cause losses or delays.
• Regulatory risk. Listing standards, position limits, exercise rules, and tax law can change.

3.Risks specific to common strategies

QuantMint surfaces analytics for the following strategy families. Each carries distinct risks. The summary below is illustrative, not exhaustive; it does not replace the ODD.

3.1 Covered calls

Selling a call against shares you own caps the upside on those shares at the strike price plus the premium received. The premium does not protect you from a decline in the underlying beyond the premium amount. Early assignment can occur, especially around dividends, and can produce an unwanted tax event or force you to deliver shares you intended to keep. If you close the call at a loss while still holding the shares, you may have a wash sale or short-term/long-term tax mismatch.

3.2 Cash-secured puts

Selling a put obligates you to buy the underlying at the strike if assigned. Maximum loss is roughly strike × 100 minus premium per contract, which can be many times the credit. The position can lose materially before expiration if the underlying drops sharply, and you are exposed to gap risk overnight.

3.3 Vertical spreads (bull put, bear call, bull call, bear put)

Spreads have a defined max loss equal to the width of the strikes minus the credit (for credits) or the debit paid (for debits). Loss can occur quickly if the underlying moves through the short strike, and partial assignment of the short leg can leave you with unwanted stock or short-stock exposure. Spreads have lower probability of large gains than long single options.

3.4 Iron condors

An iron condor combines a bull put spread and a bear call spread. Max loss is the wider of the two wing widths minus the total credit and can be several times the credit collected. The structure is hurt by large moves in either direction and by sharp increases in implied volatility. Adjustments add commissions and can convert a defined-risk structure into a more complex risk profile.

3.5 Calendars and diagonals

Calendar and diagonal spreads carry vega and skew risk that is harder to model than direction. A volatility crush or a sudden term-structure inversion can cause the long leg to lose more than the short leg gains. Early assignment of the short leg can leave the long leg unhedged.

3.6 Long single options

Buying calls or puts has limited risk (the premium paid) but a high probability of expiring worthless. Most long single options held to expiration lose money; profit usually requires a directional move and a timing window and a vol environment all to align.

3.7 Protective puts & collars

Buying puts to define a downside floor on shares you own reduces but does not eliminate loss. The cost of the put reduces total return, the floor is only effective until expiration, and rolling protection forward involves new costs and timing decisions. A collar (long put financed by short call) further caps upside.

4.Margin, assignment & exercise

Many strategies use margin or short options. Margin can amplify losses and can subject you to maintenance calls and forced liquidation by your broker, often at the worst possible time. American-style equity options can be assigned early at any time before expiration; assignment is generally most likely on options that are in-the-money around dividends and on the day before expiration. Index options are typically European-style with cash settlement, but exercise mechanics vary — consult your broker. QuantMint computes a modeled probability of assignment, but assignment is a discrete event determined by the OCC, not by our model, and can occur at probabilities lower than our models suggest.

5.Limits of the QuantMint models

QuantMint uses widely recognized quantitative methods, including (without limitation) Black-Scholes-Merton, Bjerksund-Stensland 2002 closed-form pricing for American options, binomial cross-validation, the SABR stochastic-volatility surface, GARCH-class realized-volatility forecasts, Monte Carlo simulation, and a composite probability model that combines terminal price probability with adjustments for early exercise, dividends, and event risk. All of these methods rest on assumptions that do not hold perfectly in real markets.

• Black-Scholes-Merton and binomial pricing assume continuous trading, lognormal returns, frictionless hedging, and constant or piecewise-constant volatility — none of which is true.
• Implied-volatility surfaces are interpolated and extrapolated from quoted options. At illiquid strikes, the surface is an extrapolation and may be wrong.
• Probabilities reported by the platform — including probability of assignment, probability of profit, probability of touch, and probability of finishing in-the-money — are modeled estimates conditional on the assumptions above. They are not predictions and they are not guarantees. Outcomes will differ, and may differ materially.
• Expected-value calculations assume the modeled probability distribution is correct. If it is not (and it is never exactly correct), realized expected value will differ.
• Greeks (delta, gamma, theta, vega, rho) are first- and second-order sensitivities at a snapshot in time. They change as the market moves.
• Stress tests apply hypothetical shocks to spot, vol, and time. They are scenarios, not forecasts.
• Language-model summaries are generated from deterministic numeric inputs and are sanitized for prohibited language, but may still contain errors. Always verify against the underlying numbers.
• Strategy scanners rank candidates from a finite chain at a point in time. Better candidates may exist outside the scanned universe, and ranked results can change minute-to-minute as the chain updates.

QuantMint does not warrant that any modeled probability, score, or ranking is accurate, complete, or predictive of any market outcome. See Section 9 of the Terms of Service.

6.Market data & event-data limits

The Services depend on third-party market and event data (currently Tradier and Finnhub). That data may be:

• Delayed — some streams are delayed by 15+ minutes during U.S. market hours;
• Stale — outside regular hours, last-trade and quote data may be hours or days old;
• Incomplete — option chains can omit strikes that exist at exchanges, and corporate-action adjustments can lag;
• Erroneous — bad ticks, mis-corporate-actions, mis-mapped tickers, and missing quotes occur in production data.

QuantMint applies validation (chain monotonicity, butterfly, calendar, and put-call-parity checks) and surfaces data-quality warnings on candidates that are based on stale or suspect inputs, but cannot guarantee data correctness. Always confirm critical inputs against your broker before placing a trade.

7.Past and modeled performance

Any historical or modeled return, yield, win rate, calibration metric, or backtest displayed in the Services is for informational purposes only. Past performance and modeled performance are not indicative of future results. Backtests have inherent limitations — including survivorship bias, look-ahead bias, fill assumptions, and changes in market structure — and modeled probabilities reflect a model, not a guarantee. Live trading will involve commissions, slippage, taxes, and discretion that hypothetical results do not capture.

8.Tax considerations are your responsibility

Options trading produces complex tax consequences in the United States, including (without limitation) short-term vs. long-term capital gains classification, wash-sale rules, straddle and conversion rules, qualified-covered-call rules, §1256 mark-to-market treatment for certain index options, and varying state-level treatment. QuantMint does not provide tax advice. Consult a qualified tax professional about your specific situation before trading.

9.You decide every trade

QuantMint does not place trades on your behalf and does not have discretionary authority over any account. You alone evaluate every analytical output, decide whether any strategy is suitable for you in light of your investment objectives, financial situation, time horizon, and risk tolerance, and place every trade through your own broker. Your trades are your responsibility.

If you have read this document and you do not understand any risk it describes, do not trade options until you do. The OCC's Characteristics and Risks of Standardized Options is the authoritative reference and should be your first stop.