Sell/Short Call

Selling or “Going Short” on a Call is a strategy that must be devised when the investor is not so bullish on the market. On selling a Call, the investor earns a Premium (from the buyer of the Call).

This position offers limited profit potential and the possibility of large losses on big advances in underlying prices. Although easy to execute it is a risky strategy since the seller of the Call is exposed to unlimited risk.

Investor View: Very Bearish on the Stock / Index.

Risk: Unlimited.

Reward: Limited to the premium received.

Breakeven: Strike Price + premium received.

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