Definitions

Naked Option Strategy

Posted By: TradersLog

A naked option strategy is a high risk unhedged trading strategy - involving either short selling call options to capitalize on the fall in price of a security, or selling put options to capitalize on the rise in price of a security. Selling naked calls is a higher risk strategy due to the fact that there is no limit to potential losses in the case of the stock rising. Naked refers to the unhedged nature of the trade.

See also: Options Trading , Naked Option

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