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Derivatives




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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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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