Short Call
A position created by writing a call option, receiving the premium and taking on an obligation to deliver if exercised.
Formula
Profit at expiry = Premium Received x Lot Size - max(Spot - Strike, 0) x Lot Size; loss is unbounded above the strike
Unit
₹
In depth
A naked short call has capped gain and unlimited loss, which is the most dangerous payoff available to a retail trader — there is no upper bound on how far an underlying can rise. Margin is required and rises as the position moves against the writer, so a large adverse move produces margin calls and forced closure at the worst prices. The position wins most of the time and loses enormously occasionally, a distribution that flatters a track record right up until it does not. Writing a call against shares already owned is a covered call and is a materially different, bounded position.
Worked example
Write a 24,000 call at 300, receiving 300 x 75 = ₹22,500. At an expiry of 24,900 the loss is (900 - 300) x 75 = ₹45,000 — twice the premium received, and it grows without limit as the index rises further.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Short Call” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.