By Leanna Kelly Selling calls can be a lucrative way to make money. Savvy traders will sell calls to bullish investors and pocket the debit when the option is out of the money (or left unexercised). Unfortunately, there’s risk potential associated with call selling, which is why most investors sell covered calls. For those who have a huge appetite for risk, there’s also naked call selling.
Naked call selling occurs when an investor sells call options without owning the underlying security. An option that’s in-the-money can quickly become problematic for a naked seller. Because they don’t own the security, they’ll need to buy …read more
