naked option Finance Definition
An
option contract whose underlying shares are not owned by the person writing the
option. The writer of a naked option exposes him- or herself to risk if the
option contract is exercised by the buyer and the writer doesnt own the
shares. The writer will have to purchase the underlying shares in the market at
what could be an unfavorable price in order to deliver them according to the
terms of the option contract. Also called uncovered
option.
Browse dictionary entries near naked option
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