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Derivatives




Break Out


Re-establishing an original position taken by an option buyer, undoing whereby a previously made conversion or reversal of an option from one type to another. For example, in case an investor sells an underlying stock short, aiming to convert a long call into a synthetic long put, the long call can be “broken out” by covering the short position in the underlying stock, i.e., a long position need to be taken in that stock again.



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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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