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Options Strategies
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Short Call
| Strategies |
Short Call |
| Component |
Sell call |
| Potential Profit |
- When the stock price/index level is below the break-even point
- Limited to the premium received
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| Maximum Loss |
Unlimited, equals to stock price/index level minus break-even point |
| Time Value Impact |
Positive |
| Break-even |
Strike price/level plus premium received |
Example
| Component |
Sell ABC Sep $200 Call |
| Net Premium |
Receive $25 |
| Break-even |
$200+$25=$225 |
| Profit when |
Stock price is below $225 |
| Potential Profit |
$25 |
| Potential Loss |
Stock price - $225 |
| Time Value Impact |
Positive |
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