What Are Short Options?

Short options is an options trading strategy where you sell — or "write" — a call or put contract instead of buying one, collecting the premium immediately in exchange for taking on an obligation that only the option's buyer can trigger. Opening a short call obligates you to sell the underlying asset at the strike price if the contract is exercised; opening a short put obligates you to buy it at the strike price instead. Because Pluang's options are American-style, that obligation is not limited to the expiry date — the buyer can exercise, and you can be assigned, at any point before expiry. The premium you receive when you open the position is yours to keep no matter what happens afterward; it is never returned, even if the contract is later assigned. Short options sit on the opposite side of every long options trade: for every buyer paying a premium to gain a right, a seller receives that same premium in exchange for accepting a duty.

• Two forms. A short position is either a short call (obligation to sell the underlying if exercised) or a short put (obligation to buy the underlying if exercised) — never both at once on the same contract.
• Premium is credited upfront. The moment you open a short options position on Pluang, the premium is added to your balance immediately, before you know whether the contract will ever be exercised.
• Assignment can happen any time before expiry. Because Pluang's contracts are American-style, the buyer isn't required to wait until expiry to exercise — a short position can be assigned early, at any point the buyer chooses, right up to expiry day.
• It's the mirror image of long options. Buying an option (going long) means paying a premium for the right to act; selling an option (going short) means receiving a premium for the obligation to act if called on.
• Closing early is possible. A short position doesn't have to be held until expiry or assignment — you can buy back the same contract ("buy-to-close") to exit before either happens.

Related questions:

Q: What's the difference between a short call and a short put?
A short call obligates you to sell the underlying asset at the strike price if the contract is exercised, and it's typically opened when you expect the price to stay flat or fall. A short put obligates you to buy the underlying asset at the strike price if exercised, typically opened when you expect the price to stay flat or rise. Both pay you a premium upfront; the difference is which side of the trade — selling or buying the underlying — you're obligated to take if assigned.

Q: Do I keep the premium if the buyer never exercises the contract?
Yes. The premium is credited to you the moment you open the short position, and it stays yours regardless of what happens next. If the contract expires without being exercised, you keep the full premium and your obligation simply ends. If it is exercised or assigned instead, you still keep the premium — it's compensation for taking on the obligation, not a refundable deposit tied to the outcome.

Q: What is the opposite of a short options position?
The opposite is a long options position — buying a call or put instead of selling one. A long position pays a premium upfront for the right (not the obligation) to buy or sell the underlying asset at the strike price. Short and long positions sit on opposite sides of the same contract: one side pays a premium for a right, the other receives that premium in exchange for a corresponding obligation.

Q: Can I close a short options position before it expires?
Yes. You can exit a short position at any time before expiry by buying back an identical contract, known as "buy-to-close." Doing so ends your obligation immediately, whether or not the contract has moved in your favor. This is a common way to lock in a profit early or limit further exposure, rather than waiting to see whether the buyer exercises or the contract expires unassigned.