Naked Option
Definition
Selling an option contract without owning the underlying asset or an offsetting hedge position, exposing the seller to theoretically unlimited risk on naked calls, or substantial risk on naked puts.
Example
Selling naked calls carries unlimited upside risk if the underlying surges — the seller must deliver shares at the strike no matter how high the price goes.
Related Terms
Frequently Asked Question
What is a Naked Option?
A naked option is an option sold without owning the underlying or a hedge. Naked calls carry unlimited risk; naked puts carry substantial risk. Requires margin and is regulated.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.