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 be talking about selling short options positions and really, what does that mean. There's a big misconception out there with regard to the understanding of the difference between long and short option contracts. And so, what I want to try to do in this podcast is just quickly explain the short side of option contracts, basically what it means, what you're doing and what the eventual outcome should be or how you get out of the position. Selling short option contracts basically means that you are selling contracts that you do not own yet with the obligation that you will either repurchase those contracts at expiration or that they will expire out of the money and worthless. That's the assumption for most option selling strategies. It's very similar to insurance. Insurance is a contract that you would sell. If you’re an insurance company, you sell somebody insurance on their house, collect in a premi