PLEASE READ THIS DISCLOSURE IN ITS ENTIRETY BEFORE USING AUTOOPTIONS AI OR TRADING OPTIONS
Not Financial Advice
AutoOptions AI is a software tool, not a financial advisor, broker-dealer, or registered investment advisor. Nothing on this platform — including AI-generated signals, strategy recommendations, confidence scores, probability estimates, backtests, paper trading results, market analysis, or any other content — constitutes personalized investment advice, a recommendation to buy or sell any security, or a solicitation to trade.
All content is provided for educational, research, and informational purposes only. You are solely responsible for your trading decisions and any resulting gains or losses.
OPTIONS TRADING INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT APPROPRIATE FOR EVERY INVESTOR.
1. General Options Trading Risks
Options are complex financial instruments. Before trading, you should understand:
Risk of Total Loss: Options can expire worthless, resulting in the total loss of the premium paid.
Leverage Risk: Options provide leverage, which amplifies both gains and losses relative to the underlying asset.
Uncovered/Naked Options: Selling uncovered options (naked calls in particular) carries theoretically unlimited loss potential.
Time Decay (Theta): Options lose value as they approach expiration, even if the underlying moves in your favor.
Implied Volatility Risk: Changes in implied volatility can significantly impact option value independent of the underlying's price movement.
Assignment Risk: Short option positions may be assigned at any time, resulting in an obligation to buy or sell the underlying security.
Early Exercise: American-style options may be exercised before expiration in ways that are unexpected or disadvantageous.
Liquidity Risk: Wide bid-ask spreads and low open interest can make it difficult to enter or exit positions at favorable prices.
Gap Risk: Underlying securities can gap significantly in price overnight or over weekends, bypassing stop-loss orders.
Multi-Leg Complexity: Spread strategies (iron condors, straddles, etc.) involve additional complexity and multiple points of risk exposure.
AI signals are statistical outputs, not predictions. They are based on pattern recognition in historical data and may frequently be wrong.
Model limitations: AI models can fail in novel market conditions, high-volatility regimes, geopolitical events, or liquidity crises that differ from training data.
Confidence scores are not probabilities of profit. A 90% confidence score does not mean a 90% chance of making money — it reflects the model's internal certainty, which may be miscalibrated.
Overfitting: AI models may appear highly profitable in backtests while performing poorly on live, unseen data — a phenomenon known as overfitting or look-ahead bias.
Data latency: Real-time market data may be delayed. Trading decisions based on stale data can result in unexpected losses.
System failures: AI models can produce erroneous outputs due to software bugs, data corruption, or infrastructure failures.
No guarantee of accuracy: We make no representation that AI signals are accurate, timely, or profitable.
3. Backtesting & Paper Trading Limitations
Past performance does not predict future results. This is not a legal formality — it is a fundamental truth of markets.
Backtests are simulations based on historical data. They do not account for the full complexity of live trading, including:
Slippage (the difference between expected and actual execution prices)
Liquidity constraints and market impact of your own orders
Bid-ask spreads at the time of execution
Broker commission costs and fees
Changes in market regime or volatility structure
Survivorship bias: Historical data may exclude securities that were delisted, went bankrupt, or were subject to halts.
Look-ahead bias: Strategy parameters optimized on historical data may incorporate information that was not available at the time of hypothetical trades.
Paper trading does not replicate live trading. Simulated executions assume fills at displayed prices, which is often not achievable in live markets.
4. Automated Trading Risks
System risk: Automated order execution is subject to software bugs, API failures, network outages, exchange downtime, and latency issues that can result in missed trades, duplicate orders, or incorrect order parameters.
No kill switch guarantee: While we provide emergency stop controls, there is no guarantee that stop commands will be received or processed before orders are transmitted to the broker.
Runaway algorithms: Software errors could theoretically cause unintended repeated orders. You are responsible for monitoring all automated activity and maintaining the ability to manually intervene at the broker level.
Order rejection: Broker risk controls or market conditions may cause orders to be rejected or partially filled without notice.
You remain responsible: Enabling automated trading does not transfer responsibility for trading decisions to AutoOptions AI or Freedom Empowering Capital Management LLC. You are accountable for all automated orders placed through your account.
Monitor continuously: We strongly recommend monitoring automated trading activity continuously, especially during volatile market conditions, earnings announcements, and macroeconomic events.
5. Alpaca Brokerage Risks
Alpaca Securities LLC is an independent, unaffiliated broker-dealer. We are not responsible for Alpaca's platform reliability, order execution quality, margin calls, account restrictions, or regulatory actions.
Margin accounts: Trading on margin amplifies both gains and losses and can result in losses exceeding your initial deposit.
Pattern Day Trader (PDT) rule: Accounts under $25,000 may be subject to the PDT rule, which restricts day trading activity.
Options approval: Options trading requires Alpaca account approval. Not all strategies are available at all approval levels.
SIPC protection covers up to $500,000 (including $250,000 in cash) for securities held at Alpaca. It does not protect against losses from trading.
Always maintain the ability to access and close positions directly through Alpaca's platform independently of AutoOptions AI.
6. Market & External Risks
Market risk: Options prices can move sharply due to earnings announcements, economic data releases, geopolitical events, central bank decisions, or other unforeseen events.
Black swan events: Extreme market dislocations (circuit breakers, trading halts, exchange outages) can prevent you from closing or managing positions.
Regulatory risk: Changes in securities regulations could affect the availability or legality of certain options strategies.
Tax risk: Options trading has complex tax implications including short-term vs. long-term capital gains, wash sale rules, and mark-to-market rules for certain instruments. Consult a qualified tax professional.
7. Freedom Empowering Capital Management — Internal Use
This platform is developed and used by Freedom Empowering Capital Management LLC for proprietary research and strategy development purposes. Live trading decisions made by principals of Freedom Empowering Capital Management LLC are made by licensed individuals in their professional capacity, and are separate from and not governed by the software's automated signals. All live trading activity by the firm is conducted in compliance with applicable securities laws and the firm's own internal risk management policies.
Summary Acknowledgment
By using AutoOptions AI, you confirm that you:
Understand that this platform is not a financial advisor and provides no personalized investment advice
Accept that all trading signals, AI outputs, and analyses are for educational purposes only
Acknowledge that past performance, backtests, and paper trading results do not predict future live results
Accept sole responsibility for all trading decisions and their consequences