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Sell Call Option

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Sell Call Option


1. Let's clarify the problem: You asked "because sell call option?" which seems to inquire why someone would sell a call option. 2. A call option gives the buyer the right, but not the obligation, to buy an asset at a specified strike price before expiration. 3. When you sell (write) a call option, you receive a premium upfront. This is your income from selling the option. 4. The seller of a call option has the obligation to sell the underlying asset at the strike price if the buyer exercises the option. 5. Reasons to sell a call option include: - To generate income from the premium if you expect the asset price to stay below the strike price. - To hedge or reduce risk if you already own the underlying asset (covered call strategy). 6. Important formula: Profit from selling a call option = Premium received - Max(0, Asset price at expiration - Strike price). 7. This means if the asset price stays below the strike price, the option expires worthless and you keep the premium as profit. 8. If the asset price rises above the strike price, you may have to sell the asset at the strike price, potentially limiting your gains. 9. Selling call options is a strategy used to earn income or hedge, but it carries risk if the asset price rises significantly. 10. In summary, selling a call option is done to collect premium income and manage risk, expecting the asset price not to exceed the strike price significantly.