Uncovered option

{
  "id": "MLC-T-LAW-005037",
  "term": "Uncovered option",
  "field": "Law",
  "definition": "An option position in which the writer sells the contract without owning the underlying asset (for a call) or holding cash set aside to buy it (for a put), so the writer may have to acquire the asset in the market if exercised. It is also called a naked option. An uncovered call has theoretically unlimited loss because a stock price has no ceiling, while an uncovered put's loss is capped at the strike price less the premium received.",
  "url": "https://mlchart.com/terminology/law/uncovered-option/"
}