Neutral

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DEFINITION of 'Neutral'

1) A term that describes an option on a security or market that is neither bullish nor bearish.

2) A term that describes a person who is non-biased in the case of a dispute, such as an arbitrator.

BREAKING DOWN 'Neutral'

If an investor has a neutral opinion, that is, he or she feels a security or index will neither increase nor decrease in value in the near future, the investor can undertake an option strategy that may profit despite the lack of movement in the underlying security.

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RELATED FAQS
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    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
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