Bullish

• Long Call
• Short Put
• Long Synthetic
• Call Backspread
• Call Bull Spread
• Put Bull Spread
• Covered Call
• Protective Put
• Collar

Bearish

• Short Call
• Long Put
• Short Synthetic
• Put Backspread
• Call Bear Spread
• Put Bear Spread

Neutral

• Long Straddle
• Short Straddle
• Long Strangle
• Short Strangle
• Long Guts
• Short Guts
• Call Time Spread
• Put Time Spread
• Call Ratio Vertical Spread
• Put Ratio Vertical Spread
• Long Call Butterfly
• Short Call Butterfly
• Long Put Butterfly
• Short Put Butterfly
• Long Condor
• Short Condor

Short Call

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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raman

Posted 8 days ago

Best stratergy to cover your stock.

Peter

Posted 25 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 25 days ago

Peter, is a naked call the same as a naked put?

Peter

Posted 214 days ago

Hi JD, you could buy the underlying stock as a hedge, which would make your position a "covered call".

JD

Posted 215 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 278 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 278 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 322 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 322 days ago

Can anyone give an example for 'short call' and short put'?

Jerry

Posted 330 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 336 days ago

Hi, may I know what's the difference between SHORT CALL and SHORT PUT?

Paul

Posted 379 days ago

Yes.

DAMODAR

Posted 380 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 422 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 423 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?

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