Selling a Call
This is a strategy that you would employ if you were bearish about the prospects of the underlying markets, or if you thought the price is likely to stay the same.
The profit/loss profile of a sold Call is the mirror image of the profile of a long Call (i.e. a Call that has been bought).
In other words, when the short Call (the sold or written Call) is making a profit, the long Call will be making a loss (and vice versa).
So if we consider the same Option from the previous example, the December FTSE® 6500 Call with a premium of 35, let's look at the value of the sold Call for different levels of the index at expiry:
Risk
Selling, or writing, a Call Option (without being long the underlying) is a risky strategy. The potential risk is unlimited, as the underlying price could, in theory, increase to infinity.
Reward
The maximum possible profit for writing an Option is the premium. In the example, the seller of the Call will make 35 points provided the FTSE® expires at 6500 or lower.