Call Option : What are Naked Calls ?

Covered calls are far less risky than naked calls (where there is no opposite position in the underlying), since the worst that can happen is that the investor / trader is required to sell stocks already owned at below their market value.

When a physical delivery uncovered / or  naked call is assigned on exercise, the writer will have to purchase the underlying asset to meet his/ her call obligation and his /her loss will be the excess of the purchase price over the exercise price of the call reduced by the premium received for writing the call.

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