Short Call

Psychology:

A Short Call (Naked Call) refers to the selling of a single Call option. This type of option contract is most suitable when both market volatility and market trend are bearish. In other words, if you believe that an underlying asset’s share price will remain steady or fall you would enter a short call. Unfortunately, there is the risk that the underlying asset’s share price will go up. In this case you could suffer significant losses.

Risk / Reward:

Maximum Loss: Unlimited as the market rallies.

Maximum Gain: Limited to the premium taken in for the call option you sold.