cabinet trade

cabinet trade ( cab)

A trade that allows options traders to execute deep out of the money options by trading the option at a price less than the minimum tick (based on the minimal allowable tick convention). Chicago Mercantile Exchange Glossary

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Sometimes used as an alternative to the simple abandonment of a long options position. This is where a worthless position is closed ( sold) for a notional consideration in order to facilitate the crystallisation of losses for taxation and accounting purposes. Dresdner Kleinwort Wasserstein financial glossary

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A trade that allows options traders to liquidate deep out-of-the-money options by trading the option at a price equal to one-half tick. Exchange Handbook Glossary