8.2
Naked Positions
8.2
Naked Positions
The
holding of an option only is called a naked
position. That is, if you buy a
call option and nothing else, you have a naked call.
There
are four naked positions: buying a
call, writing a call, buying a put, and writing a
put.
The
values from the four possible naked positions are shown in Figures 8.1-8.4.
In each graph, value is defined as the terminal payoff less the cost of
the option.
Figure 8.1
Buy Naked Call Option
Figure 8.2
Buy Naked Put Option
Figure 8.3
Write Naked Call Option
Figure 8.4
Write Naked Put Option
In
the next topic, we discuss Covered Positions.
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Financial Trading System