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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Naked Options

Definition:

See covered options. To be "naked" means to sell options where you don't have enough of the underlying security to protect you against adverse price movements. If you have sold call options and don't own the stock, you stand to lose a boatload of money if the stock price rises, because you have to buy the stock on the open market in order to satisfy your delivery obligation with respect to the option.

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