Cash secured naked puts are equivalent trades to a Covered Call. They are sometimes referred to as synthetic covered calls because the risk profile is the same, although cash secured naked puts do not require the investor to purchase the asset or commodity in advance (unlike covered calls).
Cash secured naked puts can be used as a method of reducing the cost basis of opening a position in an Underlying asset or commodity. The put seller takes in Premium from the put buyer, if the price of the stock falls then they must purchase it at the Strike Price, but with the Premium deducted from that amount also. If the stock does not fall, the cash secured Naked Put seller does not purchase the stock and keeps the Premium.
External LinksCash-Secured Put
OIC article describing the cash secured naked put.Uncovered Put Write
Options Guide article about selling uncovered (naked) puts.Selling Cash-Secured Puts For Income
Trade King article on how to use cash secured naked puts as a method to generate income from options.Naked Put vs. Covered Call
An article about the differences between cash-secured naked puts and covered calls.