DEFINITION of 'Cash Trigger'

A condition that triggers an investor to make a trade or take a specific action, such as a purchase, sale of the security, or the purchase or sale of a derivative (such as an option) of that security.

BREAKING DOWN 'Cash Trigger'

If XYZ stock rises from $20 to $40 a share, an investor could sell the stock outright, or sell calls against the stock in an effort to garner income. Again, the cash price is ultimately the trigger or determinant that stimulates some future action.

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