What Is a Written Call Option? How It Works and Risks

To write a call option is to sell someone the right, but not the obligation, to buy an underlying asset from you at a specified price, called the strike price, by a specified expiration date. In exchange, you receive a premium upfront and take on the obligation to sell the asset at that strike price if the option is exercised, even if its market price has risen much higher.

Check the product’s listed specifications when evaluating what does it mean to write a call option.

Suppose you own 100 shares of a stock and write one call option covering those shares: if the stock stays below the strike price and the option expires unexercised, you keep the premium and your shares. If the option is exercised, you must sell the shares at the strike price, so the premium provides income but does not let you keep gains above that price.

A covered call—one backed by shares you already own—may suit you if you would be willing to sell those shares at the strike price, while an uncovered or “naked” call can expose you to potentially unlimited losses if the asset’s price climbs. Before writing either type, understand the contract size, expiration date, premium, possible assignment, and your brokerage’s requirements; the premium is compensation for taking on a real obligation, not a guaranteed profit.

If you arrived here looking for advice on writing a marketing “call” instead, that is a different subject: our How to Write a Call-to-Action That Actually Works ebook guide focuses on CTA copywriting for marketers and creators, not financial options. We use “call to action” to mean language that prompts a reader to take a next step, whereas a call option is a financial contract with defined rights and obligations.