Single Leg

Outright Puts

A long or short put with nothing else alongside it.

Expiration payoff profile for Outright Put
Payoff at expiration

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 put 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 other hand, selling cash-secured puts is a wonderful strategy, which we describe under Cash Covered Put.

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