Short Call – Playing Neutral to Bearish with Premium Income

Short Call – When the Upside Looks Capped and Time Is on Your Side (Illustrative Example:

| September 2024 | Historical Price Reference: ₹5000) Market View Bearish to Neutral. This strategy is used when you expect the stock to remain below a resistance level or move sideways with limited upside. In this illustrative case, EICHERMOT was trading near ₹5000 in September 2024, and the expectation was that further upside would be capped. The Trade (Illustrative | Hypothetical Premium) • Sell EICHERMOT 5100 Call @ ₹120 (Premium is illustrative and used only for explaining the concept.) Breakeven • Strike Price + Premium Received • 5100 + 120 = ₹5220 Max Profit • Limited to premium received (₹120) • Achieved if EICHERMOT expires at or below 5100 Max Loss • Unlimited • Increases if EICHERMOT moves sharply above breakeven Premium & Margin • Premium: Received upfront • Margin: Required Effect of Time & Volatility • Time decay works in favour of the position if price stays below the strike • Rising implied volatility increases option value and risk Quick Logic Check (Important) • Profit depends on price stability below resistance, not on a sharp fall • Best used near strong overhead supply zones • Risk is open-ended—strict discipline and position sizing are essential