Can You Sell Call Options When the Market Is Above the Strike Price and Take Profits?

The short answer is yes, you can sell your call options for a profit if the market is above your strike price. To answer your question fully, a person buys a call option expecting the price of the underlying stock to start rising, which in turn raises the value of the call option.

However, in order for you to book a profit after selling the call option, the price of the underlying share has to rise past a certain point known as the breakeven point.

The breakeven point is simply calculated by adding the premium you paid for the option to your strike price. For example, let's say you bought call options for a stock trading at $10 with an $11 strike price and a six-month expiration window for $2 per share.

You will pay a $200 premium because options are usually sold in lots of 100 shares. To make a profit on your options trade, the underlying shares have to rise up to $13, which is your breakeven point.

Any gains past $13 will be your profit. So if your shares are currently trading at $15, the value of your options will rise to $400, but you have to subtract the $200 premium you paid to arrive at a $200 profit.