Naked Calls: Small Premium, No Ceiling on the Loss

Intermediate · 17:24

A small premium up front, and no ceiling on what you can lose. This lesson shows what selling a naked call really signs you up for.

After this lesson you can

  • Work out a naked call's breakeven, and what every dollar above it costs you
  • Explain why the margin requirement grows as the stock rises, and what triggers a margin call
  • See why an overnight gap skips straight past a stop, and what assignment leaves you holding
  • Size a trade by what a gap would cost, not by the odds of a loss
  • Know the five mistakes, including the most dangerous one: trusting a high win rate

Chapters

  1. 0:00Same call, no shares
  2. 1:44What naked means
  3. 3:25What it pays at expiration
  4. 5:43Margin, and why it moves
  5. 7:56Gaps and assignment
  6. 9:55Managing the risk
  7. 12:17Choosing strike and expiration
  8. 14:13Five mistakes
  9. 16:01The whole lesson on one screen

Practice in the game: Level 4 · The Ceiling

In Chinese: Lesson 5 · 卖出裸看涨

All lessons in Options Trading for Beginners →