Naked Writer

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Dictionary Says

Definition of 'Naked Writer'

An options seller who does not own the underlying security for the options contract he or she is offering. Options are contracts that give the buyer the right but not the obligation to buy (call) or sell (put) shares at a particular price and future date. Since a naked writer does not hold a position in the underlying security represented in the options contract, the investor is exposed to more risk.

Also called uncovered writer or uncovered options writer.

Investopedia Says

Investopedia explains 'Naked Writer'

Naked writers are exposed to additional risk, since they hold no position with which to hedge against the adverse movement of the underlying security's price. If the options contract is exercised, the naked writer would be forced to buy or sell a certain number of shares at a potentially undesirable price. Naked writers try to profit by receiving premiums for writing the contracts without the need to purchase share lots.
Search results for

'Naked Writer'

  • My brokerage firm won't allow naked option positions. What does ...

    http://www.investopedia.com/ask/answers/05/NakedOptions.asp
    ... However, if XYZ Company releases news about its new products and the price soars
    to $40 and our option writer has a naked position (ie he does not hold the ...

  • Should Your Options Go Naked?

    http://www.investopedia.com/articles/optioninvestor/05/010505.asp
    ... period. And, the naked-option writer, for the possibility of gaining a limited
    amount of money, takes on an unlimited amount of risk. ...

  • Naked Call Writing: A Risky Options Strategy

    http://www.investopedia.com/articles/optioninvestor/122701.asp
    ... The naked call writer, therefore, is faced with the unattractive prospect
    of a limited profit and a seemingly limitless loss. Now ...

  • Series 65 Study Guide - Alternative Investments - Derivative ...

    http://www.investopedia.com/exam-guide/series-65/alternative-investments/derivative-securities.asp
    ... A writer of a naked call option does not own the stock on which the call
    has been written. Therefore, if the stock rises and the ...

  • Naked Options Expose You To Risk

    http://www.investopedia.com/articles/optioninvestor/08/naked-options.asp
    ... (To read more on this subject, see Naked Call Writing.) Controlling Risk The
    call writer does have some risk-control strategies available. ...

  • The Truth About Naked Short Selling

    http://www.investopedia.com/articles/optioninvestor/09/naked-short-selling.asp
    ... And, although naked short selling is often given a bad reputation in the media because
    it is frequently abused, it ... John Olagues. No writer biography is available ...

  • Resume Scribes Seal The Deal

    http://www.investopedia.com/articles/financial-careers/09/resume-writers-interview-job.asp?partner=a
    ... The key to using a resume writer is finding a good one. ... How to Find a Qualified
    Writer Find out whether the resume writer is certified. ...

  • Series 7 Study Guide - Derivatives - Option Positions ...

    http://www.investopedia.com/exam-guide/series-7/derivatives/option-positions.asp
    ... Covered Call A call writer may be required to deliver the stock if the buyer exercises
    his option. ... Investopedia.com. No writer biography is available. ...

  • Getting To Know The "Greeks"

    http://www.investopedia.com/articles/optioninvestor/02/120602.asp
    ... The writer of a naked option, be it a put or a call, would therefore not benefit
    from a rise in volatility, because writers want the price of the option to ...

  • CFA Level 1 Study Guide - Derivatives - Managing Risk with Options ...

    http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/managing-risk-options-strategies-covered-calls-protective-puts.asp
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