naked optionnaked option
naked option - Investment & 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 doesn’t 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.