Deep-in-the-Money Call

A short deep-in-the-money naked call will have a delta very close to minus one. This makes this position a viable substitute for short stock.

As the stock moves down in price, this position will capture the move almost dollar-for-dollar, until the stock price nears the strike price of the short call. As with shorting the actual stock, this short stock surrogate brings cash into your brokerage account from the sale of the expensive call. This cash earns interest as it sits in your account.

This naked call position will require margin in your brokerage account, but still should not tie up nearly as much capital as shorting the real stock. The possibility of an early assignment is somewhat less than for the naked put position ...

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