Strip

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DEFINITION of 'Strip'

1. For bonds, the process of removing coupons from a bond and then selling the separate parts as a zero coupon bond and interest paying coupons. Also known as a stripped bond or zero coupon bond.

2. In options, a strategy created by being long in one call and two put options, all with the exact same strike price.

INVESTOPEDIA EXPLAINS 'Strip'

In the context of bonds, stripping is typically done by a brokerage or other financial institution.

RELATED TERMS
  1. Call

    1. The period of time between the opening and closing of some ...
  2. Strap

    An options strategy created by being long in one put and two ...
  3. Zero-Coupon Bond

    A debt security that doesn't pay interest (a coupon) but is traded ...
  4. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  5. Put

    An option contract giving the owner the right, but not the obligation, ...
  6. Coupon

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