naked position

naked position definition - business

naked position

A security position, either long or short, that is not hedged. For example, an investor short 500 shares of IBM with no other position in IBM stock (such as ownership of calls) has a naked position in that security. A naked position is considered aggressive, because it subjects the investor to large potential gains or losses.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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