Short options refer to positions taken by investors who sell options contracts without owning the underlying asset. When selling a call option, the investor has the obligation to sell the underlying asset at a specified price if the option is exercised. When selling a put option, the investor has the obligation to buy the underlying asset at a specified price if the option is exercised. Short options can be used to generate income through the collection of premiums, but they come with unlimited risk if the market moves against the position.