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Short Naked Call

Analyzing the risk profile of a short naked call

Variation In Quantity

The image below shows how a short call risk profile changes when selling multiple contracts. A single call is shown as a solid gray line for comparison. In this profile, we are selling two calls instead of one. Our break even has not changed but our risk and profit potential doubles. If we were sell three contracts, our b/e would remain the same, and both our max loss and max profit would triple. This pattern would continue for as many contracts as we decided to sell.
Figure 4

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