NAKED POSITION
\nˈe͡ɪkɪd pəzˈɪʃən], \nˈeɪkɪd pəzˈɪʃən], \n_ˈeɪ_k_ɪ_d p_ə_z_ˈɪ_ʃ_ə_n]\
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A futures market's un-hedged position. Call option writer with the right to buy or put option writer with the right to sell, having no corresponding long position or short position on the underlying asset, is in a naked position. The writer is exposed, unprotected from the price fluctuations that make this risky. Contrast to covered position. Also known as uncovered position.
By Henry Campbell Black
Word of the day
Snake's-head
- Guinea-hen flower; -- so called in England because its spotted petals resemble the scales of a snake's head.