A short call, also known as a naked call or uncovered call, is a high-risk option strategy used by traders who expect a stock or other underlying asset to either decline or stay below the strike price of the option sold. This strategy involves selling a call option without owning the underlying asset.
A naked call option strategy is one in which an investor writes/sells a call contract without owning the underlying securities. This strategy is sometimes referred to as uncovered call writing or a short call and is much riskier than the covered call alternative. The risk is that by writing the contract you are promising the buyer of the contract the right to buy shares at the strike price. In a covered call you already own the shares and the buyer of the contract simply takes your shares at the strike price if they are in the money. With an uncovered call or naked call you must buy the shares if the contract is executed regardless of the price. That price in effect could go up dramatically leaving you on the hook for a loss that in a sense is unlimited. Many firms will not even allow for the trading of naked calls and those that do often have strict margin requirements that are involved. The advantage of the naked call strategy is the chance to capture the premium from writing the call without the required investment on the underlying security.
It depends on whether the short call is covered or naked. If you have a short covered call (you own the stocks you wrote the call on), you wouldn't hedge it--if the call gets exercised you turn over the stocks you own and call it good. If you have a short naked call (you don't own the stock), hedge with a long call that has a strike price no more than the strike price of the short call. Maybe a few bucks less, if you can get it--if the counterparty to your short call exercises it, you exercise your long call, turn over the stock you received. Your profit will be the difference between the premiums on the calls, plus the difference between the strike prices.
Selling a naked put is a bullish strategy, and is mathematically the same as a covered call write, where you buy something and sell a call against it. Selling a naked call is a bearish strategy, and is the same as covered short write, where you short something and write a put against it. In either case, you make money from time decay, falling volatility, or a move in the direction that you want.
"Shorting a call" is better known as writing a naked call. Basically, a naked call is a call on a position you don't hold, and it has unlimited risk--if you get exercised and the strike price plus the premium is lower than the stock price, you must make up the difference out of your margin account--or you'll receive a margin call from your brokerage. Many brokerages won't allow you to write a naked call, and the ones that will demand a very large margin account and a lot of experience in trading options.
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A naked virus has no lipid "coat".
A streak.
I call ´em: The great little ones.
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A Short Duration Call is a call that does not last long.
A nudist.
Nude, naked, bare.