Convertible Arbitrage

Dictionary Says

Definition of 'Convertible Arbitrage'

An investing strategy that involves the long position on a convertible security and a short position in its converting common stock.
Investopedia Says

Investopedia explains 'Convertible Arbitrage'

This strategy attempts to exploit profits when there is a pricing error made in the conversion factor of the convertible security.

Related Definitions

  • Arbitrage

    The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar ...
    Read More »
  • Common Stock

    A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are ...
    Read More »
  • Conversion Price

    The price per share at which a convertible security, such as corporate bonds or preferred shares, can be converted into common stock.
    Read More »
    • Convertibles

      Securities, usually bonds or preferred shares, that can be converted into common stock. Convertibles are most often associated with convertible bonds, which allow bond holders to convert ...
      Read More »
    • Short (or Short Position)

      1. The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.2. In the context of options, it is the sale (also known as "writing") of ...
      Read More »

Articles Of Interest

Partner Links