strip (redirected from separating strip)

Strip

1. For bonds, the process of removing coupons from a bond and then selling the separate parts as a zero coupon bond and interest paying coupons. Also known as a stripped bond or zero coupon bond.

2. In options, a strategy created by being long in one call and two put options, all with the exact same strike price.

Notes:

In the context of bonds, stripping is typically done by a brokerage or other financial institution.

See also: Call, Coupon, Put, Straddle, Strangle, Strap, Strike Price, Zero Coupon Bond

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Strip

Variant of a straddle. A strip is two puts and one call on a stock. A strap is two calls and one put on a stock. The puts and calls have the same strike price and expiration date. See: Strap.

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strip

A combination of two put options and a call option. The buyer of a strip profits from large variations in the price of the underlying asset, especially if it is moving downward.