Naked but not overexposed

摘要

When selling options, there is significant downside if something goes wrong. Although you can protect yourself with spread techniques, these compromise some of the benefits of the original naked position. There are other solutions.rnOne of the first concerns that arise when trading options for income on a futures portfolio is how to manage the risk. Many strategies are available, and most of those involve spread strategies. However, there are benefits to selling naked options — that is, not off-setting them by creating spreads — and traders need to be aware of risk-mitigating techniques that specifically benefit naked positions.rnThere are many reasons to forego more conservative spreads in favor of naked positions. For one, if a trader is correct in his market analysis and the market moves in his favor, you profit more quickly from a naked position than a credit spread. Second, to collect the same premium, a trader willing to sell naked can sell a strike further out-of-the-money than a spread trader covering his downside with a long option.