What Is a “Naked Option” and How Is It Analogous to an Unhedged ASIC Investment?

A naked option is an option contract sold by a trader who does not own the underlying asset (for a call) or has not shorted the underlying asset (for a put). It carries theoretically unlimited risk.

An unhedged ASIC investment is analogous because the miner is fully exposed to two major risks: a sharp drop in the cryptocurrency price and the risk of rapid ASIC obsolescence. Both scenarios expose the investor to potentially catastrophic, unlimited financial loss.