Legging Out

legging out

The closing of one side of a hedged position while leaving the other side of the hedge position open. For example, an investor might buy an October call on ExxonMobil and sell short a November call on the same stock. Subsequently buying the November call to cover the short position while continuing to hold the October call results in the investor legging out.

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Legging Out

In a hedged investment, the act of closing one position while keeping the other open. For example, suppose one owns a stock and also holds a put option to sell that stock at a certain price in case the stock price drops significantly. In this case, legging out would involve selling the put option while continuing to own the stock.