naked option


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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.
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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
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References in periodicals archive ?
But this is not the case for naked option sellers - those who do not own the shares or the underlying asset.
Bob the rep traded investment equities, primarily technology plays and then naked option contracts
naked option writing--selling an option without owning the underlying futures contract.