Short options
What is a Naked Put and what are the margin and assignment requirements if the trade goes wrong?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A naked put is selling a put option without a corresponding short stock or hedge position, requiring margin collateral set by the broker, and if assigned, the seller must buy 100 shares at the strike price even if the market price has fallen well below it.
How it works
Margin requirements for naked puts are generally lower than for naked calls since losses are capped at the strike price minus premium, but they can still be substantial relative to account size.
An example
Selling a naked $50 put for $2.00 obligates the seller to buy shares at $50 if assigned, even if the stock has dropped to $20, resulting in a loss of roughly $28 per share.
Risk & limitations
OCC disclosures note naked put sellers can lose nearly their entire strike price value if the underlying stock becomes worthless, despite the premium received.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.