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Investments glossary

Risk Reversal

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Quotes of the day:

The GOLD in Golden years was identified by the sight impaired. It is actually Rust!!

— Jenny Flowers Strother

A risk reversal is a hedging strategy that protects a long or short position by using put and call options. This strategy protects against unfavorable price movements in the underlying position but limits the profits that can be made on that position. If an investor is long a stock, they could create a short risk reversal to hedge their position by buying a put option and selling a call option.



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