• Outright Puts   Long put

    An outright or naked put position is a long or short position in a put without any other offsetting position such as a position in the underlying stock, segregated cash, or another option.

    A long put position has risk that is limited to the price paid for the call option. A naked short put position has nearly unlimited risk; the risk is limited only because the price of the underlying stock can't drop below zero.

    Retail option traders are cautioned that selling naked puts is extraordinarily risky. On the otehr hand, selling cash secured puts is a wonderful strategy that we describe under the Cash Covered Put tab.