Pairs trade

A pairs trade is a type of stock market trade. It is a spread trade where one asset is shorted and another asset is bought. If the spread between the two assets changes, the trade is profitable or at a loss. This depends on the direction of the change.[1]

Examples

A Debit/Credit Spread, short-selling a put/call, whilst buying an option of the same type.
A stock pairs trade that short sells Mastercard shares while buying Visa shares. [1]

References

"What Is a Pairs Trade?". Investopedia. Retrieved 2022-04-20.

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