Why you shouldn’t sell naked call options on stocks

naked call option, naked call options, call option, sell call options

When I started trading options, I thought it was more dangerous to sell puts. The reason for this was my conviction that a stock’s price is falling faster than it’s increasing. In general, this statement is not false. But the more experience I gained the more it got clear that actually the call side is the more “dangerous” one.  There are, of course, situations where it’s worth to sell call options on stocks. But in general, selling calls turned out to be riskier than selling puts. In this article, I’ll explain you the reasons for it and also show you situations where it’s nevertheless worthwhile to sell call options. (more…)