naked option


Also found in: Thesaurus, Legal, Financial.

naked option

n.
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 call option is then called by the option holder, the investor must purchase shares in the market for delivery and is therefore caught naked. Also called uncovered option.
ThesaurusAntonymsRelated WordsSynonymsLegend:
Noun1.naked option - a put or call option for which the seller or buyer has no underlying security position
option - the right to buy or sell property at an agreed price; the right is purchased and if it is not exercised by a stated date the money is forfeited
Mentioned in ?
References in periodicals archive ?
The latest in this growing genre is Joe Kolman's NAKED OPTION (Harriman House), a novel about a disgraced options trader who tracks a multi-million dollar scam and a murder through Wall Street's gay subculture.