How to SELL a CALL Option - [Option Trading Basics]

Many people don’t understand that you can actually sell option contracts without having the stock, or without owning the other option side of the trade.

Selling options is more popular among professionals than buying option contracts. That is because when you sell option contracts, you can allow the time decay to work in your favor.

You need to understand that there are four parts to a trade. You can buy a call or sell a call and you can buy a put or sell a put.

When you’re a buyer of a call, you want stock prices to go up. When you’re a buyer of a put, you want stock prices to go down. When you’re a seller of a call, you want prices to go down, and if you’re a seller of a put, you want stock prices to go up.

Selling a call option is very similar to selling a car that is not on inventory. Car dealerships often sell cars that aren’t even on the lot, because you may want it in a different color, or with special features that they may not have at the time. So what they do is sell the car to you, and then they order it and make it especially for you. That’s often what happens, with selling call options.

What is a call option?

Most people buy calls, at least the beginners. When you buy a call, you want the stock to go up, you have a bullish outlook. However, selling a call means you’re looking for the stock to go down, you have a bearish outlook.

The way most people approach selling calls is they already have a stock position, and then they sell calls against it, in order to hedge or protect that investment. This is also known as a covered call strategy.

The advantage that you have when selling a call is that if the stock stands still, you make money, if it goes down, you make money, and if it goes up a little bit, you still make money. So there is a higher probability of success.

However, the disadvantages of selling a call option contract is that you have a capped or maxed profit, which means you don’t have unlimited profit potential, and also you have unlimited risk, because there’s unlimited loss potential, as the stock price continues to head higher.

In this video we’re going to look at the profit picture and risk profile when it comes to selling a call, and also I’ll show you how to sell a call on an options trading platform.

#sellingcall #calloption #optiontrading #tradingbasics #sellcall

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Hey, I’m Sasha, and I help people learn to trade options, create a consistent monthly income, and build your retirement account even if they have never traded before, are terrible at picking stocks, or have failed for many years! My goal is to help you learn and navigate the markets to profit consistently.

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All of the stocks mentioned in this video and any other videos we have are opinions and not investment, financial, or legal advice. These videos are for general education, information, and entertainment. Do your due diligence and consult with a registered financial advisor before taking any position since everyone has a different risk tolerance.

[AmbitionCoreTrading]

This was single handedly the most informative tutorial I've watched

[andymiser]

I’ve been searching for almost 2 days on an explanation that it’s clean and easy for beginners to understand selling a call option and this is the best one that I found!

[gruponemesis]

this is the best video on this subject....ive been searching for 3 thank you! NOW i know why the vertical spread exists.

[eljuancho]

Fantastic content I have 3 days trying to learn selling a call when I have the stock as collateral, thank you very much!

[neymarmagic]

How do u select strike prices for selling call, if u could make a video on that, it would be helpful ty.

[elismith]

Best Explanation by far! Thanks for the video!

[trangnguyen-bgzu]

Best video about sell a call option. Thank you

[thatdividendguy]

Hello guys I'm a dividend investor just did my first option trade today. I initiated a negitive position in Altria. I have a couple questions. When selling call options do you always want to go for a higher price? What happens if you sell it at a negative price and it doesn't hit that price? Will I lose money or shares? Or will the contract expire and be worthless and I keep the premium? Thanks for the help I jumped in to quick and probably made a mistake lesson learned.

[supersaid]

Excellent informative.. next to make video about selling options other like puts vertical trade etc and what not

[hdcontents]

On Robinhood they ask to own 100 of the underlying stock before you are able to sell a call option. Can I sell options on other brokerages like TD or Thinkorswim without owning the shares? Also will they take a large capital to place this order if not owning the shares is a requirement?

[TheDestineyAngel]

God bless you man, this is the top video in stock trading tutoring for options. All of the other videos were vague especially to beginners. RH has a “free option trading”. I somewhat feel ready to trade options after watching this.

[PositiveInvesting]

Great video Sasha! I noticed that the video (your facecam) wasn't "Sticky" or "missing frames" like I pointed out earlier. Did you change something?

*New Stock Market Videos Now!*

[cryptokinggg]

One thing I'm confused on is what happens if you sell you're call option and then the price keep going up ....but the person you see it to "does not" exercise the call and they choose to sell it also

What would happen then?

Also I hear "most" call options are not exercised even if the stock keeps going up as it would be more profitable for the call owner to just sell the call rather than actually exercising the call

Am I right ?

[zheweiwu]

By selling a call or put, do we have to wait until the expiration date? After selling the options, do we get the profit immediately into our account?

[moneymanfernando]

So what I get from this video is that selling covered calls is the way to go. The best chance of making money.

[Mangeurdemouton]

Why would you wait until the end of the contract if you reach your maximum gain? You sell a call option at 150 and then the stock goes to 130(maximum gain), then you just have to sell it right now because you reached the maximum profit. I would not risk to just wait for fun. Do I understand well? My goal is basically to sell contract and make money with the theta or by the stock moving in my favor.

[Chinews]

So if the contract I have on a call, I have bought a call contract where it has to get to 150 it's at 135 expiration date is at 11-25-22 what if it hits the 150 tommrow am I good either way because it already hit the 150 or can I still lose money if I don't sell it and it drops. Hope you can answer thanks

[fullstack]

Excellent explanation, like the cheat sheet

[iHaveSomethingForYouToSniff]

Everybody talks about buying the option but not what to do once you reach your target price. I could profit right now but I don’t know how to get out. Not a big loss so i’m okay with it.

[Cole-grgi]

Do you have a video on how to set up the P/L "charts" (7 min 40 seconds in) of an options you currently own in ThinkorSwin?