Short Call Strategy
Sell call options to collect premium with bearish outlook. Unlimited risk requires careful management.
Short Call Calculator
Profit/Loss at Expiration
Position Summary
• Short 1 call at $155 strike
• Premium received: $3.25
• Maximum profit if stock stays below $155
• Unlimited risk if stock rises significantly above breakeven
⚠️ Risk Warning
Short calls have unlimited loss potential. As the stock price rises above the strike, losses increase dollar-for-dollar with no cap. This strategy requires significant margin and active risk management.
Strategy Overview
Description
A Short Call involves selling a call option without owning the underlying stock. It profits when the stock stays below the strike price, with the maximum gain being the premium received.
Setup
When to Use
- •You expect the stock to decline or stay flat
- •Implied volatility is high
- •You want to collect premium income
- •You understand and can manage unlimited risk
Advantages
- +Immediate premium income
- +Profits from time decay
- +Benefits from volatility decrease
- +No upfront capital for option
Disadvantages
- -Unlimited loss potential
- -Requires margin account
- -Subject to early assignment
- -High risk strategy
How It Works
Sell Call: Receive premium for selling call option.
Monitor Position: Watch stock price relative to strike.
Manage Risk: Close or roll if stock rises significantly.