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Strip

• In option trading, strip refers to two puts and one call.

• Is a term in the commodity markets which refers to the placement of contracts in different delivery months. For example, the simultaneous placement of 12 contracts in the January through December calendar months would be a strip. This compares to a Stack.

 
 Embedded terms in definition
 Calendar
Call
Commodity
Delivery month
Delivery
Option
Placement
Stack
Trading
 
 Referenced Terms
 Bundles: Are variations of Strip trades whereby a trader or risk manager can place a series of calendar month contracts in one transaction. Packs can be bought or sold. They are quoted in quarter basis points from the previous settlement price. These transactions expedite credit market positions and swap hedges and adjustments. One can also trade bundles on a forward basis comparable to other money and credit market instruments.

 Commodity year color codes: Are used to distinguish different years available for trading. The following list reflects the 10 year Eurodollar Strip.

  • White -Year 1
  • Red -Year 2
  • Green -Year 3
  • Blue -Year 4
  • Gold -Year 5
  • Purple -Year 6
  • Orange -Year 7
  • Pink -Year 8
  • Silver -Year 9
  • Copper -Year 10.

It should be noted that some of these colors have been used for different years by other exchanges over time. Codes are often used in conjunction with other information to avoid errors in order transmission and execution.

 Packs: Are variations of Strip trades whereby a trader or risk manager can place a series of calendar month contracts in one transaction. Packs can be bought or sold. There are four contracts in a pack. Eurodollar packs are quoted in minimum half-tick increments.

 Stack: Is a position which is focused on a particular delivery or expiration date. For example, a futures position which is comprised of 12 contracts all of which are established for December delivery. This compares to a Strip.

 Strip mortgage participation certificate strip pc: Ownership interests in specified mortgages purchased by Freddie Mac from a single seller in exchange for Strip PCs representing interests in the same mortgages.

 
 Related Terms
 Interest only strip
Strip mortgage participation certificate strip pc

<< Striking price Strip mortgage participation certificate strip pc >>

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