> For the complete documentation index, see [llms.txt](https://docs.kyte.sh/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kyte.sh/reference/risks.md).

# Risks

What can go wrong for buyers, sellers and stakers, and what cannot.

{% hint style="success" %}
**In short.** A buyer can lose the premium. A seller gives up upside (calls) or may have to buy tokens that keep falling (puts). There is no leverage, margin or liquidation, so no position can go below zero. **Exercise early**: a transaction that lands at or after expiry fails.
{% endhint %}

* **Sellers** give up upside above the strike (calls), or must buy tokens that may keep falling (puts).
* **Buyers** can lose the entire premium if the option isn't worth exercising.
* **Exercise early.** Robinhood Chain has a single sequencer. A transaction that lands at or after expiry fails.
* **Token risk.** Listed tokens can be volatile or illiquid, or have admin controls such as pausing or blocklists. Tokenized stocks follow their own issuer's rules and trading hours.
* **Price display.** Charts and "vs spot" use Uniswap v4 swaps or external quotes. The option itself never uses a price feed, so check the price yourself before exercising.
* **Smart contract risk.** Contracts can have bugs. They are covered by 106 Foundry tests with fuzzing and invariants; an external audit and a bug bounty are planned ([Status and roadmap](/about/roadmap.md)). Only use funds you can afford to lose.
* **Governance risk.** The timelock can change protocol settings within hard caps (listings, caps, fees for new positions, the fee split, the hook fee). Check the current timelock delay on-chain ([Governance and roles](/protocol/governance.md)).

There is no leverage, no margin and no liquidation. A position can't go below zero.


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