“Cierre” is a strategy where an investor reduces or terminates a position in an investment and creates a new transaction using a different security to maintain the level of investment and maximize yield. It is not risk-free and may result in losses if the underlying security experiences a recession.
Instead it is called compensation or equalization, a cierre implies the reduction or termination of an actual position in a given inversion. At the same time, the reverser will carry out an opuesta transaction using the underlying misal security. In fact, the result of the steel strategy is to maintain the level of the inversion, but it is possible to position the inversionist to obtain a greater return on the underlying value.
One of the easiest ways to understand the function of a cierre is to apply the strategy to a future contract. Indeed, the owner of a futures option can opt to upgrade from the existing contract to sign a contract to sell futures. Once a buyer has been secured for the contract, the reverser is free to celebrate another future contract with more acceptable terms, but not associated with the same underlying value.
When using the resources, the objective of the steel is to maximize the yield and minimize the reversal capacity necessary to ensure the yield. Therefore, if the inversionist finds an option that will produce better results for fewer inversions, he or she will take measures to meet the terms of the current option and then proceed to implement the new option.
The cierre will imply having a change in the wide or short position associated with an inversion that involves security, at the same time that if you compromise in an opuesta position with a new inversion that is built in the same security. In other words, the reverser can opt to reduce or eliminate a large position and create a new transaction by using a short position based on the least safety. If both the original position and the new one are deempeñan within the expectations of the inverter, the activity will generate a greater return. Sin embargo, un cierre no es seguro de ninguna manera. In the event that the underlying security experiences a recession for some reason, the reverser could lose more money from the cierre that simply had to keep the original position.
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