Mainly applies to convertible securities. A practice, usually of buying a convertible bond and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position (with expected returns above the riskless rate ) in a static environment and capital appreciation should the convertible's premium expand. This form of investing is far from riskless and requires constant monitoring. See: Chinese hedge and set up .
CONVERTIBLE ARBITRAGE
Meaning of CONVERTIBLE ARBITRAGE in English
Campbell R. Harvey. Hypertextual finance English glossary. Английский словарь гипертекстовых финансов. 2012