In the case of call options, writers are naked if they do not own either the underlying security, a security convertible into the underlying security, or a long call at a strike price equal to or lower than the strike price that was written and that does not expire before the written call. In the case of put options, writers are naked if they do not either have a short position in the underlying security, a bank guarantee letter, or do not own a long put with a strike price equal to or higher than the strike price of the put that was written and that does not expire before the put that was written. A securities position that is not protected from market risk in any manner. For instance, the position of person who writes a call option without owning a long position in the underlying security, or writing a put option without having a short position in the underlying security. Spread Narrow Market Said of a securities market that is characterized by light trading, and larger price fluctuations relative to volume than would be the case if trading is active.
Membership is limited and consists mostly of broker-dealers and investment banking houses.
The system has three levels. I displays a security's highest bid and lowest offer in the system. Level II displays market maker's quotes for securities in which they make a market. Level III allows market makers to actually enter their quotes into the system. Members of investment clubs pool their money and make group decisions on how to invest those assets.