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Reversal

Trading Term

An options strategy that involves simultaneously buying (or selling) a call option and selling (or buying) a put option, where both have the same underlying, expiration date, strike price and underlying. For example:

  • Purchase a reversal: Buy 1 XYZ April04 75 call, Sell 1 XYZ April04 75 put, Sell 100 shares XYZ
  • Sell a reversal: Sell 1 XYZ April04 75 call, Buy 1 XYZ April04 75 put, Buy 100 shares XYZ

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