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Bullish

Short Call

Short Call Option

Components

A short call is simply the sale of one call option. Selling options is also known as "writing" an option.

Risk / Reward

Maximum Loss: Unlimited as the market rises.

Maximum Gain: Limited to the premium received for selling the option.

Characteristics

When to use: When you are bearish on market direction and also bearish on market volatility.

A short is also known as a Naked Call. Naked calls are considered very risky positions because your risk is unlimited.

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Peter
Posted 25 days ago
Hi Ade, short calls are bearish strategies so you use them when you expect stock prices to fall. A short put is the opposite - you would sell a put if you expect the market to rise.
ade
Posted 30 days ago
When do you use Short put and Short call?
why do ppl use it when it is not profitable?
can you show me if this is profitable?
sorry if you have mentioned but I overlooked.
raman
Posted 39 days ago
Best stratergy to cover your stock.
Peter
Posted 56 days ago
Nope, they're the complete opposite. A naked call option loses value as the market rises and a naked put loses value as the market falls. Both have a limited profit potential of the premium received when selling the option though. See this graph for a naked put

http://www.optiontradingtips.com/strategies/short-put-option.html
Andy
Posted 56 days ago
Peter, is a naked call the same as a naked put?
Peter
Posted 244 days ago
Hi JD, you could buy the underlying stock as a hedge, which would make your position a "covered call".
JD
Posted 245 days ago
If I have a naked call OTM...how can I hedge my risk of loss, or is the unlimited risk just that...unlimited
Peter
Posted 309 days ago
Hi George,

Yes, the amount of shares remains constant, however, as the price continues to rise your losses magnify. If you are exercised, you will have to sell the shares to the option buyer at the strike price, not the current market price. So the further away from the strike price the stock is trading at, the greater your losses become.
George
Posted 309 days ago
Hi, I can see how in a short call you are limited in profit because the buyer will not exercise and your profits are the premium. But if the market rises aren't you as a selling just limited to the amount of stock you must sell to the buyer as your loss? For example if I initially own 100 shares @ 10 that I purchased, and if i sell an option and they exercise the option on me dont I just loose 1000?
Admin
Posted 353 days ago
That's either a Short Straddle or a Short Strangle:

http://www.optiontradingtips.com/strategies/short-straddle.ht ml

http://www.optiontradingtips.com/strategies/short-strangle.html
Mavis
Posted 353 days ago
Can anyone give an example for 'short call' and short put'?
Jerry
Posted 360 days ago
Short call you want the market to go down and short put you want the market to go up. Both have limited profit and unlimited losses.
ADEL
Posted 366 days ago
Hi, may I know what's the difference between SHORT CALL and SHORT PUT?
Paul
Posted 409 days ago
Yes.
DAMODAR
Posted 411 days ago
CAN THE OPTIONS (CALLS OR PUTS) SHORT AND COVER AFTER ANY TIME BEFORE EXPIRY DATE AS FUTERS SHORTSELLING AND SHORT COVERING?
Admin
Posted 453 days ago
Yes, correct. The writer is committed to selling the stock at the Strike Price if the buy decides to exercise. The premium received is the current traded price of the call option when traded.
HH
Posted 454 days ago
In other words, does this mean that the 'writer' is selling a contract (at a price) where the writer will commit to selling a stock at an exercised price? is the 'premium' that the writer receives considered the price of the call?