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GLOSSARY: Enter search term:
Browse dictionary by letter: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Glossary Term: COMBINATION

Definition(s) for COMBINATION:


1. ) a union of two or more entities, either by merging one or more of the entities into another of the entities or by consolidating the entities into a new entity. Applied to derivative products, it refers to the arrangement of options involving two long or two short positions with different expiration dates or strike (exercise) prices.

2. ) Any position involving both put and call options that is not a straddle.

3. ) A trading position involving out-of-the-money puts and calls on a one-to-one basis. The puts and calls have different strike prices, but the same expiration and underlying stock. A long combination is when both options are owned, and a short combination is when both options are written. Example: a long combination might be buying 1 XYZ May 60 call, and buying 1 XYZ May 55 put.


See Also:
COMBINATION BOND, COMBINATION STRATEGY, RATIO CALENDAR COMBINATION, CALENDAR STRADDLE OR COMBINATION, COVERED COMBINATION


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