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Definition of 'Split Block Pricing'
The act of dividing a large order of financial securities into several smaller lots in order to allow each portion to be traded at different prices. The ultimate effect of using a split block pricing method is that the trader will receive the order at a price equaling the weighted average price of each block traded.
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Investopedia explains 'Split Block Pricing'
In some cases, split block pricing would be used on a large trade order in order to match smaller positions desired by counter-parties to the transaction.
For example, a trader wants to sell 1,000 call options of XYZ corp, assuming that the only two buyers of the XYZ options want to buy 600 options at $5.00 and 400 options at $5.05; the order will be split into two blocks of 600 and 400 contracts (each representing 100 shares), respectively and the selling trader would receive proceeds of $502,000 ((400 x $5.05 x 100) + (600 x $5.00 x 100)).
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Search results for 'Split Block Pricing'
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http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/stock-dividends-repurchases.asp
... Risk; 14.18 Event Risk; 14.19 Pricing Bonds; 14.20 Duration; 14.21 International
Bonds; 14.22 Government Bonds; 14.23 Mortgage-Backed ...
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http://stocks.investopedia.com/stock-analysis/2011/Alternatives-For-Gold-Exposure-GLD-TBAR-SPGH-UBG-DGP-AGOL-SGOL-BIL1103.aspx
... The Big Boys on the Block With nearly $65 ... $11 billion in assets under management,
split between them. ... by investors as way to profit from gold futures pricing. ...
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