Naked Put


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Naked Put

A short position on a put option without having enough cash or cash equivalent to buy the underlying asset should the holder exercise the option. An investor with a naked put makes a gain or loss depending on the movement of the underlying asset. This position is quite risky and can result in large losses should the underlying asset not move in the investor's preferred direction. Naked puts are also called uncovered puts. See also: Covered Options.
References in periodicals archive ?
Respondent's broker recommended high risk stocks, inverse and leveraged Exchange Traded Funds ("ETFs"), and naked put options for Claimants' accounts," the claim alleges.
BARELY days after a video clip on social networking sites showing security forces parading four Kashmiri youth naked put the state government in a fix, a similar footage has surfaced causing further consternation.
Income traders take advantage of the advanced search features to find the highest probable naked put trades where the contract expires worthless and the option seller keeps the cash," said Patrick Rygiel, President of MTR Investors Group.
I stayed short all my naked put positions in Cummins (NYSE: CMI), Suncor (NYSE: SU), Southern Copper (NYSE: SCCO), National Oilwell Varco (NYSE: NOV), and CVR Energy (NYSE: CVI) and took some profits today on three of them.
Naked Put to Write -- Sell Tellabs (NASDAQ:TLAB) June 5 Put at an option price of 30 cents.
I want to re-cap how my two most recent naked put trades have worked out, not simply because they happen to be profitable (not always the case) but also to highlight once again how the strategy works for stocks you are fond of.
In my case, in lieu of outright buying the stock, I could sell a naked put, draw the option premium with the opportunity to be assigned the stock at a lower strike level.
If FCX is below $48 anytime before July options expiration, the holder of the naked put could be assigned and forced to buy the shares at the strike price, less the initial credit of option premium received.
Currently, the Naked Put section has 14 December candidates, all of which are above the sold strike (maximum profit).
Get premium, close by buying-to-close, write new naked put at further out month.