Selling a call option without owning the stock is called naked call writing. Remember that the call writer receives a lump sum for taking on the potential obligation to deliver 100 shares of stock to the option buyer at a set striking price (in all our examples, $40). Thus, if the stock price goes to $60, $1,600 goes out the window for the writer of a 100-share contract. The naked call writer must spend $6,000 to obtain 100 shares of Halliburton, which then must be turned over to the option buyer at the guaranteed price of $4,000. That $2,000 difference, minus the $400 option premium, makes up
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