Naked Call Writing
The naked call write is a risky options trading strategy where the options trader sells calls against stock which he does not own. Also known as uncovered call writing.
The options trader must be careful in the selection of the strike price of the call to be written as it has a significant impact to the profit/loss potential of the trade.
If one is neutral to mildly bearish on the underlying, one would execute a premium collection strategy by writing out-of-the-money naked calls.
If one is bearish to very bearish, then one would write deep-in-the-money naked calls as an alternative to shorting the underlying stock.
