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  • March 11, 2021
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Zero-Cost Option

An options trading strategy which is arranged such that the premium received from an option sold (short option) compensates for the premium paid for an option purchased (long option). It is a combination of option purchase and option writing, so that the price of the short option (premium) is the same as the price (premium) paid for the long option, so the net cost is zero.

The zero-cost option is also known as a zero-cost hedge.


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