Question

Explain the term "single-tranche trading."

   Explain the term "single-tranche trading."

Options, Futures, and Other Derivatives

Options, Futures, and Other Derivatives

John C. Hull 10th Edition

Chapter 25, Problem 4

Instant Answer

Solved by Expert Amrita Bhasin

03/31/2020

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To understand this term, we need to break it down into two parts: "tranche" and "trading." Show more…

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Key Concepts

Tranche

A tranche is a portion or slice of a larger pool or deal, often used in structured finance or debt instruments. Each tranche can represent a segment of a loan or security with its own risk and return characteristics, which allows investors to choose a segment that matches their risk appetite.

Single-Tranche Trading

Single-tranche trading refers to the practice of executing an entire trade in one contiguous block, rather than breaking it into multiple smaller transactions. This approach can simplify the trading process, enhance price transparency, and potentially reduce execution-related risks by consolidating the transaction into one unified trade.

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