Combination strategy

Definition:

A strategy in which a put and call with different strike prices and the same expiration are either both bought or both sold. Related: Straddle

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Tax differential view (of dividend policy)

The view that shareholders prefer capital gains over dividends, and hence low payout ratios, because capital gains are effectively taxed at lower rates than dividends.

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