How does a short option work?

How Does a Short Call Work? … It involves selling call options, or calls. Calls give the holder of the option the right to buy an underlying security at a specified price. If the price of the underlying security falls, a short call strategy profits.

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What are the rules for shorting?

An essential rule for short selling involves the availability of the stock to be sold. It must be readily accessible by the broker-dealer for delivery at settlement; otherwise, it is a failed delivery or naked short sale.