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1. See: Close a position.

2. To correct a mistake. For example, if an investor instructs his/her broker to sell a security and the broker instead buys it, the broker must re-sell the security, and pay the client what he/she may have lost in the mistake. This process is known as unwinding.


1. To close out a relatively complicated investment position. For example, an investor who practices arbitrage by taking one position in stocks and the opposite position in option contracts would have to unwind by the date on which the options would expire.
2. To rectify a transaction in which a mistake has been made. For example, because of a misunderstanding, a brokerage firm may have bought the wrong stock for a customer. The firm must then unwind the erroneous trade by selling the stock just purchased and buying the correct stock.
References in classic literature ?
Now for number three: you unwound every bit of the worsted while I wasn't looking!
I threw off my cape and unwound the canvas from about my body.
Dennis, with a wink and a nod, unwound the cord from about his person, and raising his eyes to the ceiling, looked all over it, and round the walls and cornice, with a curious eye; then shook his head.
Maggie's answer was to throw her arms round Tom's neck and hug him, and hold her cheek against his without speaking, while he slowly unwound some of the line, saying, after a pause,--
We will show later on that we can make many important conclusions if we determine how [OMEGA] changes with time as the yarn is being unwound.
The yarn in the layer which is being unwound has a winding angle [phi] (Figures 2 and 3).
Neither is willing to accept this fate, and they escape, encountering Lev, who is a tithe--a 10th child born to be unwound.
Rato, the IMF's managing director, one has to wonder whether he will fare any better than did the Titanic's captain when some future inquest looks into how today's global imbalances unwound.