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Short Naked Call

Analyzing the risk profile of a short naked call

What Happens At Expiration?

If The Call Expires ITM

If the share price is higher than your call strike at expiration, it means your call is
and you will be obligated to sell 100 shares at the strike price. If you do not own 100 shares, you will end up with
You will get to keep the credit you received for selling the call. Break-even is calculated by adding the credit received to the strike. As long as the share price remains below this point, the position will be profitable at expiration.
Figure 5 Figure 6

If The Call Expires OTM

If the call expires OTM, meaning the share price is below the strike, you will get to keep the entire credit received as profit. No assignments will take place, and the call will disappear from your account by the next trading day.
Figure 7

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