>"Your upside is that you make the premium + the strike price. You lose out if the share goes up past the strike + premium, but you win if it goes down, or not

>"Your upside is that you make the premium + the strike price. You lose out if the share goes up past the strike + premium, but you win if it goes down, or not up enough?" You still "lose" in the short term if the underlying goes down more than your premium covers. That's the risk you take on writing calls; the underlying can technically go to zero. But so long as it's a decent company with real earnings or growth potential, over time stocks always go back up. >"If the share price goes above $218.85, you lose out on the difference, but you still get to keep the premium + strike, so you didn't really "lose" anything, you just didn't make as much." Exactly. Although you technically still "lost", even if you didn't lose money, because you took on the risk of holding the underlying for longer than you collected in premiums (theta value of the option). But this, along with "cash secured puts"[0] is the basis of the "wheel" strategy. It goes like this: Pick a strong stock you're generally bullish on long term and would be fine with owning -> Sell cash secured puts -> When the underlying drops to the point of your CSP hitting the money, get assigned at a price you wanted to buy it at anyways, keep the premium, and now you own the underlying -> Sell covered calls on the underlying until it rises to the point of being exercised -> Get exercised, keep the profit + premium -> Start over from step one. >"It seems Interactive Brokers will let me sell a call option without owning the underlying (edit: it seems there's a separate "write option" tool), so I guess if the option owner decides to exercise your broker somehow either just take the shares out of your account or makes you buy some?" That's a "naked call"; the black tar heroin of options. You can do it, but it's incredibly risky. Stocks can technically go up infinitely, meaning you're taking on infinite risk for a finite return. The GME debacle is a great example of how dangerous that can be for an individual. One huge overnight price movement can completely bankrupt you. >"How far out do you sell OTM options for?" It really depends on the underlying. That's why it's so important to follow a stock, and get to know how it trades over a few months before playing options on it. A general rule of thumb is ~%20 OTM on monthlies puts you in the sweet spot of premium/risk though. [0] https://www.optionsplaybook.com/option-strategies/cash-secured-put/ https://www.optionsplaybook.com/option-strategies/cash-secur...