naked position

(redirected from Unhedged Position)

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The table shows that in all hedges, except one in 1996 employing one month futures contract, the variance of the unhedged position exceeded the variance of the ex-ante hedged position.
We still recommend an unhedged position and believe declines, if any, will be limited to 4.0 to 7.0 per cent.
What this means is that the market was assessing a maximum risk to an unhedged position with this profile to be around $450,000.
Thus, DuPont could be judged by some readers as riskless whereas more-knowledgeable users might realize that there is considerable risk in an unhedged position. Because sufficient detailed information is not presented, more-knowledgeable users will not be able to accurately quantify the risk from the unhedged position.
(gain) on the unhedged position in the event the foreign
We recommend an unhedged position and declines, as mentioned above, should be limited to 4.0 to 7.0 per cent.
The rating positioning recognises that AGA is primarily a single commodity producer, as well as the inherent volatility in the gold price, given the fully unhedged position of the company.
In spite of expected growth in production, EnQuest will generate negative free cash flows because of lower oil prices and transition to a largely unhedged position in 2H 2016, with debt/EBITDA leverage peaking in 2016 above 4x.
Fitch notes that for unhedged positions, exchange rate risk is included as part of Fitch's assessment of the sufficiency of asset coverage available to rated AMPS.
Cipla and IPCA Laboratories have some unhedged positions and so may marginally gain from the rupee depreciation." " The BSE Healthcare index fell due to foreign exchange losses suffered by the companies.