The Short Call Strategy or Naked Call is a bearish options strategy in which the trader sells a Call typically at or out of the money to collect a premium or credit. The goal of the short call is for the stock to stay below the strike price of the option sold so the option expires worthless and the maximum credit is retained.
The maximum gain for the Short Call Strategy is the credit received if the option expires with no value. The Short Call however has a substantial loss potential should the stock rise in price and should be followed closely with stops. The maximum loss is technically unlimited as the stock can continue to rise in value.
