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Naked put

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Definition of 'Naked put'

A naked put is a put option whose writer does not have a short position in the underlying asset of the put that they have written. This is synonymous with an uncovered put.

The writer of a put will received a fixed payment but is exposed to unlimited loss if the position moves against his or her position. Compare this to the buy of a put option who has a fixed cost and unlimited gain potential.

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