Options are contracts that entitle the holder with a choice, and not an obligation, to buy an underlying asset at a predetermined price prior to the expiry of contract. For a buyer, call options have an inherent risk to the tune of premium paid, whereas for a seller (or writer), call options have unlimited risk. Not all options carry the same risk. If you are the writer (seller), you have a different risk than if you are the holder (buyer).
When one buys a call, one buys the right to purchase the stock at a specific price. The potential to make money is unlimited, while the risk is the premium that one spends to buy the call option. One would want the price to go higher so that one can buy it at a lower price.
Call writers (sellers)
When you sell a call, you sell the right to buy securities to the buyer. The potential to make money for a call writer is the premium paid by the buyer of the option; while their risk is unlimited. To be able to make money, the call writer wants the price to stay either the same or lower so that the call buyer doesn’t exercise the option of buying the option.
In other words, when you buy a call option, the risk you incur is the premium spent on the option. And when you sell a call option, there is unlimited risk subject to the increase in the price of stock.
It is pertinent to know that options trading is risky. However, if you have done thorough research before buying a security, it is not risky when compared to trading an individual stock. Not only this, it can turn out to be more lucrative than trading individual stocks — if done the right way. If the research indicates that the stock price is likely to increase, then it is suggested to buy a call. On the other hand, if research indicates a declining stock, you can buy a put.