'Repos' or Operations of Doubles

The  “repos” or operations of doubles imply the coincidence of a c ash operation and of an inverted sign term operation.

They are done by that investor that tries to keep an eminently good management of its funds by investing its surplus sources during relatively short periods of time.

Main characteristics:

  • Through the operation contract the cash salesman commits itself to acquire these same securities he has sold on a determined period and at a prefixed price. Equally, from the point of view of the buyer, who commits itself to resell to the same person the same securities at the determined term of time and price?
  • The price of the re-buying includes the agreed interests that correspond to the elapse time period of the operation.
  • The operations of double are usually done with treasury promissory notes, but it is also admitted to do operations of doubles with other securities, as for example shares.

What is the reason for this kind of operations?

They can be done for different reasons. Lets see some of them:

  • To profit minimizing the risk: for an investor that possesses a surplus of funds during a very short term of time (one month, one week on even less than a week) may be interested to profit with it by buying securities with the commitment of being re-bought at a determined price and period of time.
  • To obtain a loan in exchange of securities: to a security holder, not interested in being free from them but with needs of temporary funds, may be interested in selling those securities with the commitment of re-buying them at pre-established price and term.

This is the case in which the buyer is interested in disposing of more votes before a stockholders meeting but doesn’t want to keep the shares afterwards. Before this situation he may use the operation of doubles (to buy in cash & sell at terms), seen in this case as a loan of the securities.

Beginner Money Investing Ways to Operate at the Stock Exchange Credit Operations "Repos" or Operations of Doubles Stock Options Underlying Assets Option Expiration Date & Price of the Exercise Period