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Conversion

   Also found in: Dictionary/thesaurus, Medical, Legal, Acronyms, Encyclopedia, Wikipedia, Hutchinson 0.01 sec.
Conversion
1. The translation of a convertible security into a predetermined number of shares.

2. A strategy used by future traders whereby they mix the purchase of option and futures contracts.

Notes:
1. Conversion can only be performed if so indicated in the bond indenture or security prospectus. Furthermore, the investor/issuer must adhere to any limitations specified.

2. A conversion involves the purchase of a futures contract and the selling of a call and purchase of a put with the same strike and expiration.


Conversion
In the context of securities, refers to the exchange of a convertible security such as a bond into stock.

In the context of mutual funds, refers to the free exchange of mutual fund shares from one fund to another in a single family.



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