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Uncovered put

• A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. Also called naked puts, the writer has pledged to buy the stock at a certain price if the buyer of the options chooses to exercise it. The nature of uncovered options means the writer's risk is unlimited.

 
 Embedded terms in definition
 Buy
Cash account
Cash equivalent
Cash
Exercise value
Exercise
Options
Option
Position
Put option
Put
Risk
Short
Stock
Writer
 
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