Definition of Naked call:
A naked call gives an investor the ability to generate revenue without actually owing the underlying security. Essentially, the premium received is the sole motive for writing an uncovered call option. It is inherently risky as there is limited upside profit potential and, in theory, unlimited downside loss potential.
A naked call is an options strategy in which an investor writes (sells) call options on the open market without owning the underlying security. This stands in contrast to a covered call strategy, where the investor owns the underlying security on which the call options are written. This strategy is sometimes referred to as an "uncovered call" or a "short call.".
Short call trading position in which the option writer does not own the underlying asset or has not deposited the amount of exercise value of the call in a cash account. Opposite of covered call. Also called uncovered call.
How to use Naked call in a sentence?
- A naked call is an options strategy in which the investor writes (sells) call options without owning the underlying security.
- A naked call's breakeven point for the writer is its strike price plus the premium received.
- A naked call has limited upside profit potential and, in theory, unlimited downside loss potential.
Meaning of Naked call & Naked call Definition