Naked option

{
  "id": "MLC-T-LAW-003344",
  "term": "Naked option",
  "field": "Law",
  "definition": "An option position in which the writer sells a call without owning the underlying asset, or sells a put without a matching short position or cash set aside, so nothing offsets the obligation if the option is exercised. Losses fall on the writer, who must buy or sell the underlying at the market price to settle. A naked call carries theoretically unlimited loss, while a naked put's loss is capped at the strike price less the premium received.",
  "url": "https://mlchart.com/terminology/law/naked-option/"
}