A Naked Call options strategy, also known as an uncovered call strategy, is a type of options trading strategy that involves selling call options without owning the underlying asset. This means that the trader is essentially "betting" that the price of the underlying asset will not rise above the strike price of the call option, and that they will be able to profit from the premium received from selling the call option.Here is how it works: -1- The trader sells a call option at a certain strike price and receives a premium from the buyer.2- If the price of the underlying asset stays below the strike price, the option will expire worthless, and the trader will keep the premium as profit.3-If the price of the underlying asset rises above the strike price, the buyer of the call option will exercise their right to buy the asset at the strike price. The trader will then be obligated to sell the underlying asset at the strike price, potentially incurring a loss.It's important to note that naked call options strategy is considered to be a high-risk strategy, as the trader can potentially lose more than the premium received if the price of the underlying asset rises above the strike price. Therefore, it is recommended that traders only use this strategy if they have a high level of risk tolerance and are comfortable with potentially incurring significant losses.In summary, A naked call options strategy is a type of options trading strategy that involves selling call options without owning the underlying asset, the trader is essentially "betting" that the price of the underlying asset will not rise above the strike price of the call option, and that they will be able to profit from the premium received from selling the call option. It's considered to be a high-risk strategy, as the trader can potentially lose more than the premium received if the price of the underlying asset rises above the strike price.
