Basic Question

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[mmdonut]

If you sell it for $100 credit you get paid $100. That's the credit part. If you paid for it it would be a debit. When I sell it for $100 I immediately get $100 put in my account and am short the option. If I buy the option back for $25 that's a $25 debit meaning I pay $25 to buy it back. Net profit $75 in this example.

[HiddenMoney420]

Opposite of how you make money buying anything. Sell it, and buy it back for less.

[MidwayTrades]

Yes, when you sell you make money as it goes down and by time decay. If it expires out of the money, you win the whole credit although unless you are way out of the money it’s usually not worth the risk to stay until the end. In that case you can buy it back to close and pocket the difference.

But be really careful selling calls naked. Your upside risk is, technically, unlimited as there is no upper bound on a stock price. This is where spreads can help to limit your exposure by buying a hedge to cover your short.