FT MarketWatch

Reversal arbitrage

A riskless Transaction consisting of the Short sale of a security, the Purchase of a call, and the writing of a put. If the value of the security increases, the Call is exercised to negate the Short sale. If the value of the security decreases, the Put will be exercised by the holder and the received security will negate the Short sale.

Related Terms: 11 Action, Call, ECU, Exercise, Inc., Purchase, Put, Risk, SEC, Short, Transaction
Other Related Pages: Category: Trading Starting With: R
Additional Related Terms: 10-K, Accreted value, Accrual of discount, Agency security, Amortization of premium, Amortized value, Asset-backed security, At par, All or any part, At best