naked option

from The American Heritage® Dictionary of the English Language, 5th Edition.

• noun An opening transaction in an option when the underlying asset is not owned by the investor writing the option. If a stock on which such an investor has written a call option is then called by the option holder, the investor must purchase shares in the market for delivery and is therefore caught naked.

from WordNet 3.0 Copyright 2006 by Princeton University. All rights reserved.

• noun a put or call option for which the seller or buyer has no underlying security position