Naked Call


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Naked Call

An investment strategy in which one sells a call without owning the underlying asset to hedge 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 calls are straightforward calls. An investor using a naked call strategy makes a profit or loss depending on the movement of the underlying asset. The risk to a naked call is that the option will be exercised, requiring the seller to buy the underlying asset at the market price and then immediately sell it (usually at a loss) to fulfill the terms of the call. Naked calls are also called uncovered calls. See also: Covered Options. Naked Put.
References in periodicals archive ?
An investor sells a naked call option with a strike price of PS90.
Tory defence minister John Profumo frolicked in its swimming pool with naked call girl Christine Keeler.
These new positions could be naked call selling or could be part of a covered call strategy.
To equities investors it is not appealing, but there are options strategies that could bring profits; put selling, covered or naked call selling, and short straddles are all possible here.
The discussions involve, among other things, the rescheduling of gold delivery obligations resulting from the exercise by counterparties of naked call options and the rescheduling of delivery obligations under matched put and call options and under spot deferred contracts.