Short Call option strategy
Shorting a Call option is a simple but risky strategy & hence qualified as an advanced strategy. It is recommended when the price of the underlying asset is expected to fall & the certainty of a rise is ruled out.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| SELL | OTM Call | 25,200 | 1 | 65 | ₹89.25 |
How it works
- Sell 1 OTM call at the 25,200 strike for ₹89.25, collecting the premium.
- You receive a net ₹5,801 upfront for the position. This is the most you can make.
Below 25,289 you profit, up to ₹5,801.
Above 25,289 you lose, and the loss keeps growing as Nifty rises.
Set-up: Sell 1 lot OTM Call.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | +₹5,801 |
| 24,400 | −3% | +₹5,801 |
| 24,900 | −1% | +₹5,801 |
| 25,150 | Unchanged | +₹5,801 |
| 25,400 | +1% | −₹7,199 |
| 25,900 | +3% | −₹39,699 |
| 26,650 | +6% | −₹88,449 |
How the Greeks affect it
When to use
When you expect a fall in the underlying asset price with more degree of conviction.
- Profits from falling or range bound stocks.
- Income strategy & could be deployed against cash holdings.
Things to watch
- Uncapped risk & a failure could result into huge losses.
Short Call: questions
What is a Short Call strategy?
Shorting a Call option is a simple but risky strategy & hence qualified as an advanced strategy. It is recommended when the price of the underlying asset is expected to fall & the certainty of a rise is ruled out.
When should you use a Short Call?
When you expect a fall in the underlying asset price with more degree of conviction.
How do you set up a Short Call?
Sell 1 lot OTM Call.
What is the maximum profit of a Short Call?
Profit limited to the call premium.
What is the maximum loss of a Short Call?
Selling options exposes you to uncapped risk where potential loss could be heavy incase the directional momentum is reversed.
What is the breakeven of a Short Call?
With Nifty at 25,151, the example on this page breaks even at 25,289 at expiry.