Strip

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.

BREAKING DOWN 'Strip'

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

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