How To Sell CALL Options in Zerodha?

Finance Guru Speaks: This article will guide you on how to Sell Call (CE) Options in Zerodha.

Zerodha, as a Trading and Demat Account, has gained very wide popularity because of very low-cost trading and ease of use. If you don't have the Zerodha account, then you can open it through this LINK. It is very easy to open a Demat Account in Zerodha.

Please read the complete article. I have shared 6 Tips at the end of the Article. Please comment, share, and like this article for constant encouragement.

To begin with, selling Call Option is also known as SHORT Call position. In India, we denote Call Option as CE (Call European).

Why and When do you sell Call Option:

You Sell Call Option only when you are sure that the Index or Stock Price (Spot or Underlying Price) will not cross the Strike Price during Expiry. You will be in gain till the Spot Price remains lower or equal to the Strike Price. As you are a Seller, you will receive Premium from the Buyer which will be your Maximum Profit if everything goes as per your expectations.

Steps to Sell Call Options in Zerodha:-

1. Login to Zerodha after clicking here. Provide your User ID, Password, and then your assigned PIN to Login.

Zerodha Login

Zerodha Login

2. On the Home Page, go to the Watchlist on the left-hand side and Search the required Call Strike to sell the CE Option and click on S button. As an example, we are selling NIFTY JUN Series 10700 CE Option as shown below. You can also select any Stock which is open for FnO trading.:-

How To Sell CALL Options in Zerodha

3. On the Next Screen, fill Sell Order details as shown below. To keep it simple, we are selling 1 LOT (equal to 75 Shares) of NIFTY at a selling price of 20. The last traded price for JUN Series 10700 CE Strike is 14.10.

With INR 20 as your Sell Price, you will receive a Total Premium of 20x75 = INR 1500 from Buyer.

It is a positional order, meaning we are not selling this Call Option for Intraday Trading. Once you fill all the details, click on Sell button:-

How To Sell CALL Options in Zerodha

4. Once you click Sell, your Call Options Sell order gets placed on the Exchange.

How To Sell CALL Options in Zerodha

Congratulations! You have successfully placed Call Options Sell Order. You can cross-check your newly created SHORT CE Order from Orders -> Orders list. This Order gets executed as soon as Exchange finds a Buyer at your requested Price.

Sharing some Tips which can be helpful for you while selling Call Options:-

TIP 1: Always try to sell Call Options when the Volatility is High. Due to High Vega or Volatility, you can get a chance to sell Call Options at a higher price. Your idea should be to sell on High Volatility and buy on Low Volatility. 

TIP 2: You should Sell Call Options ONLY when you are very sure that the Stock or Index will go down or remain close to the selected Strike Price during the Series Expiry. If you are not too sure, then don't just sell it for the sake of making money. However, you can still sell Call Option if you want to Hedge your current open positions. More details about Hedging can be discussed in a separate article.

TIP 3: Try to sell the Call Options during the mid or end of the Series so that buyer will get less time to move to ITM. Theta or Time decay affects the Premium very badly during the last week of the Expiry and it's highly beneficial for the Sellers. So keep an eye on the dates and if you are making good profits in terms of Premium appreciation, then it can be a good idea to book the profits by exiting the position. 

TIP 4: Remember, you will gain only if the Spot Price (Underlying Price during expiry) is less than or equal to the Strike Price.
Strike Price + Premium Received is your Breakeven Point after crossing which you will start making losses.

TIP 5: While selling, choose the Strike Price whose Delta is less than 0.4 value. In this manner, you can compromise on the low premium received but less probability to go ITM. However, if you are very sure about the Stock/Index movement, then you can sell Strike whose Delta is around 0.6 or 0.5 to receive a high premium, depending on your risk-taking capacity.

TIP 6: The Chances or Probability to win for Options Seller is around 67% to 80%. So, probability favors the Sellers. But be careful of any News or Events which can drastically swing the Market.

Note: Theta, Vega, Delta as mentioned in this article are known as Options Greek. If you don't have much idea about them, then a separate article can be written on their significance.

I am sure you may have so many queries around this topic. Please feel free to share your queries/comments on this article so that I can respond to you back via the Comments section. If required, I can write a fresh article as well on your queries.

Also Read:

How To Sell Put Options in Zerodha?

More Articles on Zerodha

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Images Courtesy: Zerodha Website