The risk of unlimited potential losses is a key characteristic of selling naked calls. Here's a breakdown of the potential losses:

1. *Unlimited upside*: The price of the underlying asset can rise indefinitely, resulting in an unlimited potential loss for the investor.

2. *Fixed strike price*: The investor is obligated to sell the asset at the strike price, which becomes increasingly lower than the market value as the price rises.

3. *Widening gap*: The difference between the market value and the strike price grows as the price rises, resulting in a larger potential loss.

4. *No limit to potential loss*: There is no cap on the potential loss, as the price of the underlying asset can continue to rise indefinitely.

To illustrate, if an investor sells a naked call option on a stock with a strike price of $50 and the stock price rises to $150, the investor will be required to sell the stock at $50, resulting in a loss of $100 per share ($150 - $50 = $100). If the stock price continues to rise to $200, the loss would increase to $150 per share ($200 - $50 = $150), and so on.