Options - Short Call

RECENT NEWS
Benzinga  May 4  Comment 
The short call is an intriguing position to open, if only because so many traders see it as way too risky to even consider. But some strategies are perfectly suited to take advantage of two great short call features: offset of risk, and premium...
The Economic Times  Jun 14  Comment 
They are trading stocks which give you money day on day and you must have stop losses while you trade them.
The Economic Times  Apr 15  Comment 
Devang Visaria, Chief Strategist, Devangvisaria.com, in a chat with ET Now gives his take on Friday?s trade.
Phil’s Stock World  Feb 21  Comment 
 OptionSage submits:  “Markets can remain irrational longer than you can remain solvent” - John Maynard Keynes Much like Newton was inspired to understand gravity as the Apple fell on his head (or maybe not according to this article!) so...




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Short Call

A Bearish options strategy that involves short selling or "writing" call options. When the stock falls below the strike price of the call options by expiration, the call options expire worthless and the entire premium from sale is earned.

When you short sell, you are actually selling a security without owning it, hoping that you can buy it later when the price falls and repay your loan. ghu

Examples

For example, today you are sure that company X stock price will go down in the next two weeks and it's priced today to be 10 $, you sell it today at 10$ without owning it (you are actually borrowing it from your your broker). In 2 weeks, your broker will ask you what you have borrowed. When the price is 5$ on that day in the market, you will buy it and give it to the broker. Your profit will be 5$ minus all the cost related to the transaction.

Covered Call Example

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