Short Call Option Explained
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.