Pyramiding


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Pyramiding

A type of stock swap option exercise in which a small number of previously-owned shares is surrendered to the company to pay a portion of the exercise price, for which a slightly larger number of option shares may be purchased, which are then immediately surrendered back to the company to pay additional amounts of the exercise price, and so on until the full option price has been paid and the optionee is left with just the number of shares equal to the option spread. With the advent of broker-assisted "Cashless Exercise/Same Day Sale" programs (see above), pyramiding has fallen out of favor.

Pyramiding

1. The practice of using unrealized profits from margin transactions to increase one's margin. That is, one uses unrealized profits as collateral on a margin account in order to borrow more money from a brokerage to buy more securities.

2. The practice of borrowing to expand a company's operations.