A put or call that is written by an investor who does not own a position in the underlying asset that locks in the cost of delivering the shares if the option holder elects to exercise the option. Trading naked options can be a highly risky business because if the option holder chooses to exercise his or her contractual right to buy or sell the underlying assets at the specified price, the grantor will be forced to acquire them on the open market and at the prevailing price. Compare to Covered Call; Covered Put.
Related information about naked option:
- Naked Option Definition | Investopedia
A trading position where the seller of an option contract does not own any, or enough, of the underlying security to act as protection against adverse price ...
- My brokerage firm won't allow naked option positions. What does ...
Apr 9, 2008 ... A naked position refers to a situation in which a trader sells an option contract without holding a position in the underlying security as protection.
- Naked Option - Financial Dictionary - The Free Dictionary
An option contract without another, opposite option hedging the risk. Unlike more complex spreads and straddles, which involve the purchase or sale of multiple ...
- naked option - The Free Dictionary
An opening transaction in an option when the underlying asset is not owned by the investor writing the option. If a stock on which such an investor has written a ...
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THE NAKED OPTION reveals the inspiring story of an organized group of Nigerian women who use the threat of stripping naked in public, a serious cultural ...
- What is naked option? definition and meaning
Definition of naked option: A put or call that is written by an investor who does not own a position in the underlying asset that locks in the cost of delivering the ...
- naked option: Definition from Answers.com
naked option n. An opening transaction in an option when the underlying asset is not owned by the investor writing the option.
- Selling Naked Calls - Selling Naked Puts - Naked Option Advice and ...
Selling Naked Puts - PowerOptions provides naked option advice and help including info on when selling naked calls and puts can be advantageous.