Uncovered Options Trading System
Contract: Contract is a term of reference describing a unit of trading for a commodity future or option. At the same time contract is an agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.
Contract Market: Contract Market (also referred to as an Exchange) is a board of trade designated by the CFTC (Commodity Futures Trading Commission) to trade futures or options contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded. A contract market can allow both institutional and retail participants and can list for trading futures contracts on any commodity, provided that each contract is not readily susceptible to manipulation. Contract Market is also called designated contract market.
Delivery: Delivery is the transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. It is the tender and receipt of the actual commodity, the cash value of the commodity, or of a delivery instrument covering the commodity (e.g., warehouse receipts or shipping certificates), used to settle a futures contract. Each futures exchange has specific procedures for delivery of a cash commodity. Some futures contracts, such as stock index contracts, are cash settled.
Liquidation: Liquidation (also called Offset) stands for closing out of a long position. The term is sometimes used to denote closing out a short position (cover short position), but this is more often referred to as covering.
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Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.