Banning ‘Naked’ Default Swaps May Raise Corporate Funding Costs - Bloomberg.com

What's next? No "Skinny Dipping?"Ok, before I get fired, let me explain. Naked trading is when a speculator trades a derivative security without a position in the underlying asset. For instance, if I were to short a corn futures contract, I would be "naked" since I do not own corn to sell. So prior to settlement I either have to buy back the contract or purchase corn to cover the trade. (The