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Christmas Tree |
Also found in: Dictionary/thesaurus, Encyclopedia, Wikipedia, Hutchinson | 0.06 sec. |
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Christmas Tree An investment strategy in which an investor buys a call option at a low strike price and then uses the proceeds from that sale to sell two call options at two different (but higher) strike prices. When one draws this strategy graphically, it vaguely resembles a Christmas tree. The calls have the same underlying security or asset; importantly, they must have the same expiration date. If the underlying moves modestly in the direction the trader wants, he/she can realize exceptional profits; however, if the underlying moves away from the trader, he/she has the possibility to lose a great deal. The staggered strikes for the two call options the investor sells are intended to hedge against loss in this situation. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Nowadays, families want their Christmas trees to be Douglas fir or noble fir instead, and those are imported from Oregon and Washington. Prior to 1973, all National Christmas Trees were cut trees. Thousands of Christmas trees are getting a second life thanks to the Army Corps of Engineers, which is turning the stripped and discarded trees into reefs for freshwater fish, according to Reuters News Service. |
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