Strategy

Conversion

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

Long stock, long put, short call for arbitrage

What is Conversion?

Conversion An arbitrage strategy combining long stock, long put, and short call at the same strike and expiration. Creates a risk-free position that locks in a profit if the options are mispriced relative to put-call parity. Conversions are primarily used by market makers and institutional traders to exploit pricing inefficiencies.

Complete Definition

An arbitrage strategy combining long stock, long put, and short call at the same strike and expiration. Creates a risk-free position that locks in a profit if the options are mispriced relative to put-call parity. Conversions are primarily used by market makers and institutional traders to exploit pricing inefficiencies.

Related Terms

Reversal Synthetic Stock Box Spread

Written by

ApexVol Research Team

Quantitative options research

All calculations use live ORATS institutional data — the same source used by professional volatility desks.

Technical reviewer

Ryan Silk, ApexVol Founder

Reviewed for technical accuracy

10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.

This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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