Naked option
Definition
An option contract entered into where the seller does not actually own the underlying stock. When the buyer exercises the option, the seller must purchase the shares and sell them under the terms of the option contract. Also known as an "uncovered option."
See also
Definition from Nolo’s Plain-English Law Dictionary
An opportunity to buy stock at a fixed price, offered by a seller who does not own the stock to back up the promise. If the buyer wants to exercise the option, the seller must purchase the stock at market price to make good on the offer.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:20 pm
