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Outright Futures Position

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Definition of 'Outright Futures Position'

A long or short trade on an underlying futures contract that has the potential for unlimited profit, but also carries the risk of unlimited losses. Outright futures are also called naked futures because they leave the investor highly exposed. To reduce risk, the investor may choose to purchase a protective, offsetting option or the underlying security itself.

Investopedia Says

Investopedia explains 'Outright Futures Position'

An example of a financial instrument an investor might choose, instead of an outright futures position, is a synthetic long put option. Investors might purchase this type of option when the price of a commodity is expected to drop and they want unlimited potential profit but limited risk. The synthetic will also have much lower up-front costs than an outright futures position. Another alternative to an outright futures position that can sometimes carry less risk is to take a spread position.

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