Short Call

Components

A short call is simply the sale of one call option. Selling options is also known as "writing" an option.

Risk / Reward

Maximum Loss: Unlimited as the market rises.

Maximum Gain: Limited to the premium received for selling the option.

Characteristics

When to use: When you are bearish on market direction and also bearish on market volatility.

A short is also known as a Naked Call. Naked calls are considered very risky positions because your risk is unlimited.