Options Basics

Short Call Option Explained

A short call is a bearish options strategy with undefined risk. Selling a call option is an alternative to selling shares of stock, and the seller receives payment when the option is sold.
Short Call Option Explained
Kirk Du Plessis
Apr 19, 2021

Now we are going to start getting a little bit more advanced on our discussion about trading options as we look at shorting call options as opposed to buying call options. As an option seller you have an opportunity to take it in a credit and let the option expire worthless, leaving you with the entire credit as a profit. With a short call option, you agree to sell underlying stock at the strike price at expiration and if the stock never makes it to that price then you keep the premium you took in on the initial sale. This is where our discussion about high probability trading starts to accelerate because you have the ability to sell options far OTM which gives you a high probability of success and allows you to generate income in the process.

No tags found.
Next lesson
Long Put Option Explained
A long put is a bearish options strategy. Buying a put option is a levered, risk-defined, cost-effective alternative to selling shares of stock.

Trade smarter with automation