neutral strategy

Definition

A strategy that is utilized if the investor is not aware of the direction of the stock price, i.e., whether the stock price will rise or fall. It is performed by the trader engaging in long trade for certain investment that are allegedly under-priced and going short in other investment that is considered over-priced. This protects the investment from the systemic risk involved with stock market. Note that the appropriate neutral strategy to utilize is dependent on the volatility of the underlying price of the stock.

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neutral spread hedge-like mutual fund