No worries, happy to concretize this: the really easy example would be shoes. How much would you pay for just a right shoe or just a left shoe? A lot less than the pair, since you might not be able to find the other shoe in the right size, condition, etc. Same with the seller - they don't want to be stuck trying offload a single left shoe.
In stocks, A might be a company you invested in and B some ETF that you bought as a hedge for A. What if you sell out of A, and then the price of the ETF drops? There's value in being able to liquidate the full position - the single stock plus the hedge - at once.
Comments
No worries, happy to concretize this: the really easy example would be shoes. How much would you pay for just a right shoe or just a left shoe? A lot less than the pair, since you might not be able to find the other shoe in the right size, condition, etc. Same with the seller - they don't want to be stuck trying offload a single left shoe.
In stocks, A might be a company you invested in and B some ETF that you bought as a hedge for A. What if you sell out of A, and then the price of the ETF drops? There's value in being able to liquidate the full position - the single stock plus the hedge - at once.