Rebate

What does it mean?
1. In a short-sale transaction, the portion of interest or dividends earned by the owner (lender) of shares that are paid to the short seller (borrower) of the shares.

2. In an options transaction, the amount paid to the holder of the option if the option expires worthless.

In Other Words...
1. The lender and borrower usually negotiate the rate at which the short seller will be compensated.

2. The rebate is pre-negotiated and is usually a portion of the premium paid by the option holder.

Related Links
Short Selling Tutorial - Have you ever correctly predicted a stock's decline or wondered how to be profitable in a bear market? Here you can learn how short selling works and the risks involved in it.

Options Basics Tutorial - An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them.

Related Terms
Kickback | Rebate Barrier Option | Short Sale | Short Selling

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