Short Calls

Here is a checklist and guide to help you navigate options expiration week when you have positions that need to be closed, adjusted, or rolled out to the next expiration.

Buying options and selling options have different profit and risk potential based on the rights and obligations of the two parties involved.

To create a short synthetic stock position, you simply buy an ATM put option and sell an ATM call option at the same strike price. This creates a bearish position with much less capital than shorting a stock.

A custom naked call is a bearish options strategy that combines two strategies, which provides some protection if the stock moves higher. Think of the strategy as entering an iron condor without the long call.

A short call is a single-leg, bearish options strategy with undefined risk and limited profit potential. A short call is sold when the seller believes the price of the underlying asset will be below the strike price on or before the expiration date.

A covered call is an options strategy with undefined risk and limited profit potential that combines a long stock position with a short call option. Covered calls are used to generate income if an investor is moderately bullish and plans to hold shares of stock in an asset for an extended length of time.

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.