How does a short option work?
How Does a Short Call Work? … It involves selling call options, or calls. Calls give the holder of the option the right to buy an underlying security at a specified price. If the price of the underlying security falls, a short call strategy profits.
What are the rules for shorting?
An essential rule for short selling involves the availability of the stock to be sold. It must be readily accessible by the broker-dealer for delivery at settlement; otherwise, it is a failed delivery or naked short sale.
