The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How do you short an option contract?” Shorting an option contract is very much a new term for a lot of people when they get started trading, this idea that you can actually sell something that you don’t even own yet in the marketplace and then collect a premium. But of course, there’s always a little bit of a catch and the catch is that you always have to complete what we call the trading loop. Just like when you buy stock, you have to sell it to realize a gain. When you sell an option contract or short an option contract, you have to buy back that contract at some point before expiration or at expiration and let it expire worthless in order to complete the trading loop. The simple process of selling a short option contract is actually very easy. You can do it on your broker platform by just selling a contract that you do not own yet and collecting a premium. This is what we