Pairoff

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DEFINITION of 'Pairoff'

1. A purchase of securities to offset a previously transacted sale of the same security.

2. A transaction in securities markets where off-setting buy and sell trades are settled in cash, based on the difference in the prices between the off-setting trades. No securities trade hands; instead the settlement difference between the trades is calculated, and a money wire is sent to the appropriate party.

INVESTOPEDIA EXPLAINS 'Pairoff'

1. The offsetting position is usually transacted within the same day of the original purchase. This is also referred to as crystallization.

2. Matching trades for pairoff can reduce settlement risks and security wire transfer fees. It is ultimately a form of speculation.

RELATED TERMS
  1. Speculation

    The act of trading in an asset, or conducting a financial transaction, ...
  2. Settlement Price

    In derivatives markets, the price used for determining profit ...
  3. Crystallization

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  4. Sell

    The process of liquidating an asset in exchange for cash. The ...
  5. Buy

    1. A recommendation to purchase a specific security. A buy rating ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
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