Short Call

Selling a call earns you the premium upfront, and you keep it if the price stays below the strike. The catch is severe: your profit is capped at the premium while your loss is theoretically unlimited as the price rises. A naked short call is one of the riskiest single-leg positions, for advanced traders only.

Play with the payoff

Best when

• You strongly expect the price to stay flat or fall
• You understand and can withstand unlimited risk
• You'd otherwise prefer a covered call