locked in(redirected from Lock-in)
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When an investor is unable to take advantage of preferential tax treatment because of time remaining on a required holding period. Also, a commodities position in which the market has a limit up or limit down day and investors are unable to move in to or out of the market.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
To close a position such that the profit or loss from an investment is realized. For example, if an investor buys a stock at $5 per share and the price goes to $10, the investor has a paper profit of $5 per share. However, if the investor waits to sell the stock until the price drops to $8, the locked in profit is only $3 per share. Investors often wait before locking in substantial profits or losses, as locking in a profit may result in higher taxation, while locking in a loss removes the possibility that the investment can be recovered.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
To have a large paper, or unrealized, profit in a security position, with the result being that sale of the security would engender substantial taxation.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.