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Writing Naked

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Writing naked

Writing Naked
An investment strategy that involves selling naked options. A naked option is an option contract without another, opposite option hedging the risk. Unlike more complex spreads and straddles, which involve the purchase or sale of multiple options in order to profit in different ways, naked options are straightforward calls or puts. An investor with a naked option makes a profit or loss depending on the movement of the underlying asset.


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Buffett was using strategy called writing naked puts.
Of course if you start writing naked calls or naked puts then your risk levels are going to seriously increase but when used correctly options are an amazing risk reduction tool.
 
 
 
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