shorting options

[kinggyppo]

Quote from chrismontez:

"my question is why would you sell a call which gives you unlimited risk when you can buy a put and achieve more or less the same thing "

Not true and this kind of thinking is what separates amateur option traders (myself included) from professionals. We pay for the privilege of benefiting from a drop in the underlying by buying puts. Sellers get paid for benefiting from a drop. They make $ in 4 out of the possible 5 moves in the underlying. We make money only if we zoom in and out for a short term gain or the underlying drops below our strike price. Option buyers are gamblers hoping for a big move in their direction, sellers are mathematicians measuring the long term reward of of making $ 4 out of 5 times versus the risk of a big move against them.

I am trying to get the OP to understand that the risk profile is completely different. Selling a naked call is much riskier than
buying a put. Your broker will let you buy a call with like $500 in your account, to sell in your average retail account you have to meet whatever their margin requirements are, in the old days you needed $25,000 to sell naked options. There are ways around this but that is a different subject. Good trading.