A position to sell (short) a call option where the seller (writer) does not take an off-setting position in the spot market or has not deposited the equivalent of the option;s exercise value in a cash account. |
Most retail FX market makers will not allow a trader to take an uncovered call position, as that would mean the trader assumes unlimited risk in the event the trade goes against him/her. In this way, the market maker limits the amount of risk exposure a trader can incurr.