Reverse Conversion

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Dictionary Says

Definition of 'Reverse Conversion'

A finance and risk management technique based on a put-call parity strategy that consists of selling a put and buying call (a synthetic long position), while shorting the underlying stock.  As long as the put and call have the same underlying, strike price and expiration date, a synthetic long position will have the same risk/return profile as ownership of an equivalent amount of the underlying stock.   
Investopedia Says

Investopedia explains 'Reverse Conversion'

In a typical reverse-conversion transaction, a brokerage firm short sells stock and hedges this position by buying its call and selling its put.  Whether the brokerage firm makes money depends on the borrowing cost of the shorted stock and the put and call premiums, all of which may render a return better than the money market with very low risk. In the context of futures markets, a trader would be synthetically long and short the underlying futures while looking for arbitrage opportunities. 
Search results for

'Reverse Conversion'

  • Put-Call Parity And Arbitrage Opportunity

    http://www.investopedia.com/articles/optioninvestor/05/011905.asp
    ... We can use this idea of the synthetic position, to explain two of the most common
    arbitrage strategies: the conversion and the reverse conversion (often called ...

  • Conversion Arbitrage: Introduction | Investopedia

    http://www.investopedia.com/university/conversion-arbitrage/
    ... levels. In the options markets, it is the process of conversion and reverse
    conversion that helps keep put and call prices efficient. ...

  • Conversion Arbitrage: Introduction | Investopedia

    http://www.investopedia.com/university/conversion-arbitrage/default.asp
    ... levels. In the options markets, it is the process of conversion and reverse
    conversion that helps keep put and call prices efficient. ...

  • What is the difference between convertible and reverse convertible ...

    http://www.investopedia.com/ask/answers/05/reverseconvertiblebond.asp
    ... the bondholder the right to convert the asset to equity, a reverse convertible bond ...
    The conversion feature is analogous to a call option that has been attached ...

  • Conversion Arbitrage: Dividend Risk And Reward | Investopedia

    http://www.investopedia.com/university/conversion-arbitrage/conversion-arbitrage5.asp
    Conversion Arbitrage: Dividend Risk And Reward. ... First, let's add dividend payments
    into the conversion profit equation so that is clearly understood. ...

  • The Roth Conversion Mulligan

    http://www.investopedia.com/articles/retirement/09/roth-recharacterization.asp
    ... Using this tool, we can reverse the Roth conversion and move the cash or securities
    back into your Traditional IRA and undo the taxes paid (ie the $12,500). ...

  • 5 Reverse Mortgage Scams - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0111/5-Reverse-Mortgage-Scams.aspx
    ... The Home Equity Conversion Mortgage (HECM) is the FHA's reverse mortgage program,
    which is available to homeowners age 62 and older and can be a valuable ...

  • Reverse Mergers: The Pros And Cons

    http://www.investopedia.com/articles/stocks/09/introduction-reverse-mergers.asp
    ... Since a reverse merger functions solely as a conversion mechanism, market
    conditions have little bearing on the offering. Rather ...

  • The Reverse Mortgage: A Retirement Tool

    http://www.investopedia.com/articles/04/120204.asp
    ... HECM Loans Reverse mortgages have been around since the 1960s, but the most common
    reverse mortgage is a federally-insured home equity conversion mortgage (HECM ...

  • Reverse Mortgage Pitfalls

    http://www.investopedia.com/articles/mortgages-real-estate/08/reverse-mortgage.asp
    Reverse Mortgage Pitfalls. ... In short, the costs associated with a reverse mortgage
    can initially nibble away at the income you'll receive. ...

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