when the option moves in the money the write faces a potential loss because they need to buy the option back for more than they received 
covered writing is considered to be a conservative strategy for generating income uncovered or naked option writing is highly speculative because of the potential for unlimited losses call writingsome traders will use a covered call strategy this is especially true with dividend paying stocks dividend shares will see price action or fluctuations often equal to the expected dividend payment as the ex dividend date approaches covered call writing generally results in one of three outcomes when the options expire worthless the writer keeps the entire premium they received for writing the option if the options are going to expire in the money the writer can either let the underlying shares be called away at the strike price or buy the option to close the position called away means they need to sell their actual shares to the option buyer at the strike price and the buyer will purchase the shares from them closing the option position on the other hand means buying the same option to offset the prior sold option this closes the position and the profit or loss is the difference between the premium received and the price paid to buy the option back the outcomes of writing uncovered calls are generally the same with one key difference if the share price closes in the money the writer must either buy stock on the open market to deliver shares to the option buyer or close the position the loss is the difference between the strike price and the open market price of the underlying negative number plus the premium initially received put writing