In investing, a naked option refers to a very risky trading strategy by which you can lose much more money than you invested. I am four years retired now, but still feel the need to do something that feels like work each weekday. So I sit in my tv room with my iPad in my lap and trade securities. Since I got back from vacation about six weeks ago, I’ve been doing it naked — researching price-to-earnings ratios and sipping my coffee, while feeling the seat of my easy-chair gently caressing my scrotum. Any other naked securities traders out there? BTW for my fellow securities traders: trading options naked is a fine way to do it. But don’t trade naked options — it’s way too dangerous.
It’s hard to tell what is cause-and-effect, what is merely correlation, and what is, as King Solomon observed, “Time and chance happeneth to them all.” Eccl 9:11. In the months just before I went on vacation, my portfolio performance was in the toilet. Since I returned and began trading naked, I’ve recovered nearly all of my losses from earlier this year. But that has also been what the market in general did. And I have NOT outperformed the market this year. But I have to say, it’s way more fun to trade naked. And with less than one quarter in the books of doing it this way, it’s too early to tell if there’s any correlation between trading naked and portfolio performance. In the long run, it could still pay off big.
