Short Call Calculator
Sell a call option without owning the shares and collect the premium up front. You keep it all if the stock stays below the strike, but your risk is unlimited if the stock rises sharply.
Stock
Call you're selling
Calendar days to expiry: 30
Manual settings
Left blank, each option's IV is worked out from its premium.
Has only a small effect. Leave at 4% if unsure.
Example trade shown. Replace with your own numbers.
Profit / loss by stock price
Profit / loss over time
Values before expiry are estimates using Black-Scholes and the implied volatility worked out from your premium. Selling calls without owning the shares carries unlimited risk, and your broker will require margin, which isn’t shown here. Ignores closing fees, dividends and early assignment. For educational purposes only.
What is a Short Call?
A short call (also called a naked call) means selling a call option without owning the shares. You collect the premium up front. In return, you agree to sell 100 shares at the strike price if the buyer exercises, which usually happens when the stock finishes above the strike at expiry.
If the stock stays at or below the strike, the call expires worthless and you keep the whole premium. If it rises above, you lose money, and because a stock can keep rising, your potential loss has no limit. If you already own the shares, the same trade is a covered call, which is far less risky. We have a separate calculator for that.
How to use this calculator
1. Enter the stock's current price. Adding the ticker symbol is optional.
2. Enter the strike price of the call you're selling, and the premium per share.
3. Set the expiry date, or type the number of days to expiry.
4. Enter how many contracts you're selling and any fees per contract.
The calculator updates as you type. You'll see:
- The premium you collect (your maximum profit) and your break-even price. Your maximum loss shows as unlimited.
- Your chance of making a profit and of keeping the full premium.
- Your profit or loss if the stock rises 10% or 20% by expiry.
- A chart of your profit or loss at different stock prices, today, at two dates in between, and at expiry. Hover over the chart (or tap it on a phone) to read exact values.
- A table of profit or loss by stock price and date, shown in dollars or as a percentage of the value of the shares.
You can find the premium in your broker's option chain. Use the mid-price between the bid and the ask for a realistic figure. Under "Manual settings" you can enter the implied volatility yourself, change the interest rate, or set the price range shown in the chart and table.
When is a Short Call a good choice?
- You're neutral to bearish and expect the stock to stay below the strike.
- Implied volatility is high and you expect it to fall.
- You're an experienced trader with the margin approval and a clear plan to manage the trade if the stock rises.
When might it not suit?
- In most cases for beginners. The unlimited risk means a single sharp jump, such as a takeover bid, can cause very large losses.
- The stock is trending up, or there's news or earnings due before expiry.
- You'd prefer a defined risk. A bear call spread caps your loss by buying a higher-strike call.
Things to keep in mind
- Your maximum profit is the premium. There's no limit to how much you can lose.
- Your broker will require margin to hold a naked call, and may need approval for it. The calculator doesn't show this.
- You can be assigned early, especially just before an ex-dividend date, and would then be short the shares.
- Many traders set a level at which they'll buy the call back to limit losses.
This calculator gives estimates for educational purposes only. It isn't financial advice. Option prices before expiry are modelled, and real prices will differ.