{"id":10534,"date":"2024-01-20T18:33:23","date_gmt":"2024-01-20T10:33:23","guid":{"rendered":"https:\/\/slashtraders.com\/?p=10534"},"modified":"2025-09-29T17:53:07","modified_gmt":"2025-09-29T09:53:07","slug":"naked-call","status":"publish","type":"post","link":"https:\/\/slashtraders.com\/en\/blog\/naked-call\/","title":{"rendered":"Why Experts Avoid Selling Naked Calls Like the Plague"},"content":{"rendered":"<p class=\"wp-block-paragraph\">We share the riskiest options trading strategy and why we avoid selling naked Calls like the plague. It's a trade that can lose you everything.<\/p>\n\n\n<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<span class=\"5l3rixEh2A1a5EPe4T9DxGBgS9IoqZrQ2ipPgOCXmdKeBRwRApYj1zJMsN78WIaS3dYC0hzwHJ\"><iframe title=\"The Worst Options Trading Strategy\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/OGWH_o92TX8?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/span>\n<\/div><\/figure>\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u4ec0\u9ebc\u662f\u88f8\u8ce3-put\u671f\u6b0a\uff1f\">What Is a Naked Call Option?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">Naked Call is a short Call strategy without owning 100 stocks in the first place. It is a <a href=\"https:\/\/slashtraders.com\/en\/tools\/bear-call-spread-screener\/\" target=\"_blank\" rel=\"noreferrer noopener\">bearish strategy<\/a> that becomes profitable if the stock price does not rise.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit.png\" alt=\"naked call profit\" class=\"wp-image-10538\" style=\"width:1024px;height:auto\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit.png 1280w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit-300x169.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit-1024x576.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit-768x432.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-profit-18x10.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">A naked Call profits when the stock price doesn't rise.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">A short OTM Call option earns a premium upfront. The <a href=\"https:\/\/slashtraders.com\/en\/blog\/options-value\/\" target=\"_blank\" rel=\"noreferrer noopener\">Call value<\/a> depreciates if the stock price stays below the strike price before the option expires. Then the strategy earns a profit.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Maximum profit = premium<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">If the option value expires worthless, the maximum profit of selling a naked Call is the premium.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss.png\" alt=\"naked call loss\" class=\"wp-image-10541\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss.png 1280w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss-300x169.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss-1024x576.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss-768x432.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/naked-call-loss-18x10.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">A naked Call loses when the stock price goes up beyond the strike price.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">If Nike's stock price increases beyond the strike price before expiration, we will be forced to sell 100 shares. But the naked Call strategy usually means we don't own 100 shares to sell, so we would be forced to <a href=\"https:\/\/slashtraders.com\/es\/blog\/buy-to-open-vs-buy-to-close\/\" target=\"_blank\" rel=\"noreferrer noopener\">buy to close the Call option<\/a> for a loss.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Loss = 100 x (stock price - strike price) - premium<br>Maximum loss = infinite<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">The loss is calculated as 100 times the difference between the stock price and the strike price. If unfortunately, the <a href=\"https:\/\/slashtraders.com\/en\/tools\/bull-put-spread-screener\/\" target=\"_blank\" rel=\"noreferrer noopener\">stock price keeps going up<\/a>, the maximum loss can be infinite.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u88f8\u8ce3-put\u7684\u9078\u80a1\u65b9\u5f0f\">Benefits of Selling Naked Calls<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are a few advantages of selling naked Calls:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Naked Calls can generate steady income from the premium.<\/li>\n\n\n\n<li class=\"translation-block\">It can be profitable even if the <a href=\"https:\/\/slashtraders.com\/en\/tools\/options-scanner\/\" target=\"_blank\" rel=\"noreferrer noopener\">stock price stays neutral<\/a>.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">So we can continue to sell naked Calls if we feel the stock price is overvalued.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u88f8\u8ce3-put\u7684\u9078\u80a1\u65b9\u5f0f\">Why We Never Sell Naked Calls<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are a few risks in trading naked Call options:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the account does not own 100 shares upon assignment, then we usually need to close the trade for a loss.<\/li>\n\n\n\n<li>The strategy doesn't limit the maximum loss. If the stock price keeps going up, you can lose everything over a single trade.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">So most trading platforms don't let newbies sell naked Calls, and most options experts don't recommend this <a href=\"https:\/\/slashtraders.com\/en\/blog\/beginner-options-trading-strategies\/\" target=\"_blank\" rel=\"noreferrer noopener\">options strategy<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><a href=\"https:\/\/slashtraders.com\/en\/pricing\/?utm_source=blog&amp;utm_medium=banner\"><img decoding=\"async\" width=\"1024\" height=\"126\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner.png\" alt=\"blog trial banner\" class=\"wp-image-9717\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner.png 1280w, https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner-300x37.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner-1024x126.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner-768x95.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2021\/05\/blog-trial-banner-18x2.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u88f8\u8ce3-put\u7684\u9078\u80a1\u65b9\u5f0f\">Strategies for Selling Naked Calls<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">The naked Call strategy is suitable for bearish stocks. So we prefer to use the <a href=\"https:\/\/slashtraders.com\/en\/tools\/bear-call-spread-screener\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bear Call Spread screener<\/a> to find overvalued stocks with a bearish <a href=\"https:\/\/slashtraders.com\/en\/blog\/fundamental-analysis-vs-technical-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">technical outlook<\/a>. We pay special attention to stocks with a negative Upside right now too. So we can find a list of stocks that have a high probability of going down.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u88f8\u8ce3-put\u7684\u9078\u80a1\u65b9\u5f0f\">Best Stocks for Selling Naked Call Options<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Once we filter the US stocks to find overvalued opportunities, we can choose our favourite stocks to sell naked Calls.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"262\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks.png\" alt=\"best naked call stocks\" class=\"wp-image-10545\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks.png 1264w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks-300x77.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks-1024x262.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks-768x196.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/best-naked-call-stocks-18x5.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Pick technically bearish stocks with an Upside less than 0% to trade naked Calls.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The most overvalued bearish stock right now is IDXX. So we can sell a Call contract at around 20 delta that expires next month. Then we can make a profit if the stock price stays low. But if the stock price rises sharply before expiration, our loss would be 100 times the difference between the market price and the strike price.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call.png\" alt=\"idxx naked call\" class=\"wp-image-10546\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call.png 1280w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call-300x169.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call-1024x576.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call-768x432.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-naked-call-18x10.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">A naked Call has limited profit but unlimited maximum loss.<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u88f8\u8ce3-put\u7684\u9078\u80a1\u65b9\u5f0f\">Better Alternative to Naked Calls<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Even though the naked Call is a simple bearish strategy to use, we still worry about the potential risk of unlimited losses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">So we recommend the <a href=\"https:\/\/slashtraders.com\/en\/blog\/bear-call-spread-delta-hedge\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bearish Call Credit Spread<\/a> to use the least amount of buying power for a bearish trade, while also limiting the maximum losses. Sometimes you may find returns of more than 100%.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread.png\" alt=\"idxx bear call spread\" class=\"wp-image-10549\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread.png 1280w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread-300x169.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread-1024x576.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread-768x432.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2024\/01\/idxx-bear-call-spread-18x10.png 18w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Bear Call Spread can earn a high return on capital with a small buying power.<\/figcaption><\/figure>\n\n\n\n<p class=\"has-ast-global-color-4-background-color has-background wp-block-paragraph\"><a href=\"https:\/\/slashtraders.com\/en\/blog\/slashtraders-vs-sp500\/\" target=\"_blank\" rel=\"noreferrer noopener\">SlashTraders vs S&amp;P 500: 450% Outperformance, Verified Trades and How to Copy Every Alert<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>We share the riskiest options trading strategy and why we avoid selling naked Calls like the plague. It's a trade that can lose you everything.<\/p>","protected":false},"author":1,"featured_media":10535,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"plain-container","ast-site-content-layout":"normal-width-container","site-content-style":"unboxed","site-sidebar-style":"unboxed","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":"","_wp_rev_ctl_limit":"5"},"categories":[3],"tags":[56,12,64,54,14,11],"class_list":["post-10534","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-cn","tag-en","tag-es","tag-nke","tag-options","tag-tw"],"_links":{"self":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/10534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/comments?post=10534"}],"version-history":[{"count":5,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/10534\/revisions"}],"predecessor-version":[{"id":13962,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/10534\/revisions\/13962"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/media\/10535"}],"wp:attachment":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/media?parent=10534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/categories?post=10534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/tags?post=10534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}