Package Deal

What Is a Package Deal?

A package deal is an order or transaction that contains a number of smaller exchange or transaction items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets.

A package deal may also refer to the hiring of multiple employees at the same time or none at all. This can happen if somebody is moving to a new job with a spouse or partner in the same company, or it can occur when a startup or venture is bought out by a larger incumbent. In such a case, all employees must be hired, or else the deal is off.

Key Takeaways

  • A package deal refers to multiple trades or transactions that must all be executed together at the same time.
  • For a package deal to work, all specifications of the trades in the package must be executed; otherwise, it does not trade.
  • Package deals commonly include options spread orders that have multiple legs that must be executed together.
  • A package deal in hiring occurs when several employees are taken on board as a team or unit, or else none of them join the new firm.

How a Package Deal Works

A package deal may be the best choice for traders in properly executing an investment strategy. For example, let's say an investor wants to enter into a long-short strategy, where they purchase one stock and short-sell another.

Making this order a package deal will protect the investor in case either stock is not immediately available for purchase or sale. The investor may not want the exposure of being only long or short for the period of time required to complete the second transaction.

Because it is a package deal, if all specifications of the trade are not executed, then the deal never happens. A trader looking at a special situation, and wanting to put a trade on only as a package, can make sure the trade is 100% executed to their expectations.

Having conditions in a multi-leg trade can make a lot of sense for patient traders using limit orders. This allows the trade (prices) to come to them, rather than chasing.

Package deals in trading are often seen in futures and options spread transactions.

A package deal outside of financial trading can also refer to a project or an agreement that involves multiple related items or offers that constitute multiple benefits. For example, a person going on a trip might need a plane ticket, a hotel booking, and a rental car individually, all for the cost of $1,500. With a package deal, they may be able to get all the items together for $1,000.

Real World Example

A package deal contract can also be used to attract potential investors in large-scale construction projects that would benefit a local economy. For instance, the Investment Development Authority of Lebanon (IDAL) offers a package deal contract with investor incentives.

They offer investment incentives based on an investment project's potential capital investment, the number of jobs created, and the project’s sector type.

In IDAL's package deal contract, an investor is promised incentives including:

  • Full exemption from corporate income tax for a period that can run up to 10 years, project dividends taxes for a period that can run up to 10 years, and land registration fees;
  • Up to 50% reduction on work, residence, and construction permit fees;
  • Securing work permits with no delay

What Is a Package Deal in Real Estate?

A package deal in real estate involves a number of services provided to potential buyers for a single price. The package deal would include research of areas, price comparisons, home showings, placing offers, and help in purchasing the property.

What Is a Package Deal in Business?

A package deal in business is seen as a pricing strategy. This is often done as product bundling where multiple products are packaged together and sold as one unit for one price. An example would be toothbrushes sold together with toothpaste and floss. The goal of a package deal in business is to get customers to buy more.

What Is a Package Price?

A package price is the price of a package of products, known as a product bundle. A package price is the one price of the overall bundle that comes with multiple products as opposed to buying all of the products in the bundle separately; each with its own price.

Article Sources
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  1. Investment Development Authority of Lebanon (IDAL). "Incentives Granted by IDAL."

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