An option that an investor holds without holding an offsetting position in the underlying stock is called a(n)
A) Call option.
B) Put option.
C) Out-of-the-money option.
D) Naked option.
E) Covered option.

Question

An option that an investor holds without holding an offsetting position in the underlying stock is called a(n)
A) Call option.
B) Put option.
C) Out-of-the-money option.
D) Naked option.
E) Covered option.

Quizplus · Accepted Answer

A naked option is an option that an investor holds without holding an offsetting position in the underlying stock. This means that the investor has no protection against potential losses and is exposed to significant risk. It is also sometimes referred to as an uncovered option.

An Option That an Investor Holds Without Holding an Offsetting