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Finance Dictionary and Glossary of Investment Terms
strip
Definition 1.
Bond, usually issued by the U.S. Treasury, whose two components, interest and repayment of principal, are separated and sold individually as zero-coupon bonds. Strip is an acronym for Separate Trading of Registered Interest and Principal of Securities.
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Definition 2.
Variant of a straddle. A strip is two puts and one call on a stock. A strap is two calls and one put on a stock. The puts and calls have the same strike price and expiration date. See: Strap.
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Definition 3.
1. For bonds, the process of removing coupons from a bond and then selling the separate parts as a zero coupon bond and interest paying coupons. Also known as a stripped bond or zero coupon bond.2. In options, a strategy created by being long in one call and two put options, all with the exact same strike price.
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