naked position

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Naked Position

A position that is not hedged. That is, the holder of a naked position has taken no step to reduce the risk inherent to the position. For example, if one buys 100 shares of AT&T, one is exposed to the risk that AT&T will decline in price. If one takes no action to prevent this (by buying put options or short selling AT&T, for instance), one holds a naked position in AT&T. Avoiding naked positions and hedging as much risk as possible is a substantial concern for many institutional investors.

naked position

A security position, either long or short, that is not hedged. For example, an investor short 500 shares of IBM with no other position in IBM stock (such as ownership of calls) has a naked position in that security. Because a naked position subjects the investor to large potential gains or losses, it is an aggressive investment position.
References in classic literature ?
It was because of this that I paid the price for thee at the Council when thou wast a little naked cub.
Akela, the grim old wolf who had never asked for mercy in his life, gave one piteous look at Mowgli as the boy stood all naked, his long black hair tossing over his shoulders in the light of the blazing branch that made the shadows jump and quiver.
So long accustomed to view all objects through a medium that deprived them of every glimpse of brightness, a single flash of so glorious a phenomenon, striking upon his naked vision, had blinded him forever
The outcome of the matter was that he gave the naked odwar leave to accompany him, and together they set out upon the spoor of Thuvia and Komal.
To their right was Kar Komak, naked and unarmed, yet running valiantly toward Carthoris and shouting warning as though he, too, had but just discovered the silent, menacing company that moved so swiftly forward with couched spears and ready long-swords.
Their exultation was slightly tempered by the glimpse they had had of the strange apparition of the naked white man galloping away upon the horse of one of their foemen and carrying a companion who was now among them expatiating upon the superhuman strength of the ape-man.
As they conversed their terror grew, while from the concealment of the reeds along the river below them a small party of naked, black warriors watched their every move.
Long had it been since he had thus beheld the great Tarmangani naked and alone hurtling through the jungle.
One thing must not be omitted, that, in their censures on this occasion, none ever mentioned the sum contained in the paper which Allworthy gave Jones, which was no less than five hundred pounds; but all agreed that he was sent away penniless, and some said naked, from the house of his inhuman father.
Naked have I seen both of them, the greatest man and the smallest man:--
Does the partisan of the Tetons see men on these naked fields?
The Spaniards told them, with great kindness, that if they were resolved to go they should not go like naked men, and be in no condition to defend themselves; and that though they could ill spare firearms, not having enough for themselves, yet they would let them have two muskets, a pistol, and a cutlass, and each man a hatchet, which they thought was sufficient for them.