Naked Option

What does it mean?
An option position where the buyer or seller has no underlying security position.

In Other Words...
Naked options are very risky. Profits are huge if the underlying asset moves in the direction desired by the investor. On the other hand, a writer of a naked option can lose big if the underlying asset moves in the opposite direction.

Related Links
Options Basics Tutorial - An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them.

Related Terms
Call Option | Naked Call | Naked Position | Naked Shorting

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