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Naked Calls and Naked Puts


A naked call or a naked put is a naked option (uncovered option).

When an investor sells a call option without owning the underlying asset or without depositing funds to cover the exercise value of the call, a naked call (uncovered call) occurs.

When an investor sells a put option without buying another put establishing a spread position or without depositing required funds to cover the position, a naked put (uncovered put) occurs.

Risk Statement:

Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.

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