Short Call Options aka Naked Call
| B/S | Strike | Type | Price |
|---|---|---|---|
| Sell 1 | $45 | Call | $1.29 |
| Net Credit | ($129) | ||
A short call is simply the sale of one call option. Many refer to short positions as being "naked" the option. Selling options is also known as "writing" an option.
The Max Loss is unlimited as the market rises.
The Max Gain is 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.
Short Call Option Greeks
Delta
Gamma
Vega
Theta
98 Comments
Peter July 26th, 2012 at 5:31am
Sell puts and collect the premium. If you get exercised you close out your short position.
wayne July 25th, 2012 at 9:11pm
how would you repair a losing short stock position?
Lee July 12th, 2012 at 1:49pm
Still half-lost, but had to stop and thank you for providing obviously sharp insight. Please remember that, for every one who actually writes, as many as a hundred appreciate what you do.
Warmest wishes for your success. Excellent site among soo00OOO000ooooo many visited.
Nick July 11th, 2012 at 4:44am
Hi Peter,
Could you please guide me any simple strategy, how to hedge positions, incase you are making losses due to a short call?
Peter July 4th, 2012 at 1:10am
Hi Tpbuilder,
RUT is an index and RUT options are based on the RUT index. Because of this the options are European and holders of options cannot exercise prior to the expiration date so you don't have anything to worry about.
Sometimes, however, index options might actually be based on an index future (e.g. the SPI options in Australia). In these cases the options can be American style and allow for early exercise. You just have to check the contract specifications to be sure.
Tpbuilder July 3rd, 2012 at 6:25pm
I have a vertical short call spread on RUT with July 12 expry. Both my short call and my long call are in the money as of today. I am worried about exercise and assignment. What would be the best action to take to manage the risk in this scenario. Inside short call is at 805. Outside long call is at 815. Market is at 818 as of today.
Peter April 12th, 2012 at 10:28pm
Hi Shafiqa,
Not sure what you mean, sorry. Basically long = buy and short = sell.
You can send me an email through the contact form.
Shafiqa April 12th, 2012 at 5:40am
can anyone explain in simple language whats differnce amonge
long call
short call
long put
short put
ps: how they transact actually, means long call buys short call?? is that
Peter i hope u will ans me. n plz give me ur email address if u can.
Regards
Peter April 3rd, 2012 at 12:58am
Hi Ricky, what stock is this?
ricky April 2nd, 2012 at 7:51pm
I sold a back April 5 put (in the money strike 10) but now I'm not sure what my options are. any suggestions would be greatly appreciated. thnx in advance.
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