What's the risk of a short call?

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I wanted to know what the true risk of a short call is?  I’m not sure I understand why a short call is so risky, where a short put is not considered as risky.

 

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A short call has true unlimited risk, since a stock can essentially go to infinity.  A put can only go to “Ultimate Support” also known as zero.  So, that’s why a short call has more inherent risk.

That being said, it also depends on the stock.  In an ETF, it would in theory be harder for the price to go up too fast, as it is based on something else, usually a basket of stocks or a commodity like gold.  A basket of stocks would all have to go up quite a bit to make the ETF index go up.  This happens all the time (all stocks going up), however, it is muted by the breadth of the basket of stocks for that ETF.

Hope this helps.   Chris

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Furthermore, most traders usually sell calls after the market has gone up when the call premiums seem to be higher.  But implied volatility usually is lower at such time. Therefore, calls are in reality priced relatively cheaper and the sellers end up selling calls at very close to the money strikes.  All of these factors work against the seller.  That’s why many experienced options traders seldom sell calls in most market conditions.  (covered calls are different as they are hedged by underlying stocks.)

 

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