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Derivatives

  Derivatives   |   Terms
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  • January 6, 2023
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Conversion

Changing a call option into a put option or vice versa. In the former case, an investor buys the call, sells the cash underlying short and writes a put. In the latter case, the put is bought, a long position is taken in the cash underlying, and a call is sold.

Conversion, in the realm of options, could also refer to the process of selling a call option against a long outright position in a forward currency.


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