Covered Call vs Naked Call: Risk, Margin, and Return Compared
Covered Call vs Naked Call: Risk, Margin, and Return Compared Selling a call option obligates you to sell 100 shares at the strike price if the buyer exercises. That obligation is identical whether you own the underlying shares or not — but what happens if you’re wrong is completely different depending on which one you’re doing. Understanding that gap is the whole point of comparing a covered call to a naked call. ...