Uncovered Options Trading System
Naked Option (also referred to as an uncovered option, naked call, or naked put) is the sale of a call or put option without holding an equal and opposite position in the underlying instrument.
A narrow-based security index, as defined by the Commodity Exchange, is an index of securities that meets one of the following four requirements
1) it has nine or fewer components;
2) one component comprises more than 30 percent of the index weighting;
3) the five highest weighted components comprise more than 60 percent of the index weighting;
4) the lowest weighted components comprising in the aggregate 25 percent of the index's weighting have an aggregate dollar value of average daily volume over a six-month period of less than $50 million ($30 million if there are at least 15 component securities).
National Futures Association (NFA) authorized by Congress in 1974 and designated by the Commodity Futures Trading Commission (CFTC) in 1982 as a "registered futures association," NFA is the industry wide self-regulatory organization of the futures industry. National Futures Association is a self-regulatory organization whose members include futures commission merchants, commodity pool operators, commodity trading advisors, introducing brokers, commodity exchanges, commercial firms, and banks, that is responsible for certain aspects of the regulation of FCMs, CPOs, CTAs, IBs, and their associated persons, focusing primarily on the qualifications and proficiency, financial condition, retail sales practices, and business conduct of these futures professionals. NFA also performs arbitration and dispute resolution functions for industry participants.
Nearby Delivery Month (also referred to as the Spot Month) is the futures contract month closest to expiration.
Nearbys is the nearest delivery months of a commodity futures market.
Negative Carry is the cost of financing a financial instrument (the short-term rate of interest), when the cost is above the current return of the financial instrument.
Net Asset Value (NAV) is the value of each unit of participation in a commodity pool. Basically a calculation of assets minus liabilities plus or minus the value of open positions when marked to the market, divided by the total number of outstanding units.
Net Performance is an increase or decrease in net asset value exclusive of additions, withdrawals and redemptions.
Net Position is the difference between the open long contracts and the open short contracts held by a trader in any one commodity.
Next Day (also called day ahead) is a spot contract that provides for delivery of a commodity on the next calendar day or the next business day.
NOB (Note Against Bond) Spread is a futures trading strategy that involves the buying (selling) of a ten-year Treasury note futures contract and the selling (buying) of a Treasury bond futures contract.
Nominal Price (or Nominal Quotation) is computed price quotation on a futures or option contract for a period in which no actual trading took place, usually an average of bid and asked prices or computed using historical or theoretical relationships to more active contracts.
Non-Member Traders are speculators and hedgers who trade on the exchange through a member or a person with trading privileges but who do not hold exchange memberships or trading privileges.
Notice Day is a day on which notices of intent to deliver on futures contracts may be issued.
"Notice of Intent to Deliver" (also called "notice of delivery") is a notice that must be presented by the seller of a futures contract to the clearing organization prior to delivery. The clearing organization then assigns the notice and subsequent delivery instrument to a buyer.
In an interest rate swap, forward rate agreement, or other derivative instrument, Notional Principal is the amount. In a currency swap, Notional Principal is each of the amounts to which interest rates are applied in order to calculate periodic payment obligations. Notional Principal also called the notional amount, the contract amount, the reference amount, and the currency amount.
NYMEX Lookalike is a lookalike swap or lookalike option that is based on a futures contract traded on the New York Mercantile Exchange (NYMEX).
NYMEX Swap is a lookalike swap that is based on a futures contract traded on the New York Mercantile Exchange (NYMEX).
Offer is an indication of willingness to sell futures contract at a given price. Offer is opposite of bid, the price level of the offer may be referred to as the ask.
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.