In finance, risk reversal (also known as a conversion when an investment strategy) can refer to a measure of the volatility skew or to a trading strategy.
A risk-reversal is an option position that consists of selling (that is, being short) an out of the money put and buying (i.e. being long) an out of the money call, both options expiring on the same expiration date.
[1] A risk reversal position can simulate the profit and loss behavior of owning an underlying security; therefore it is sometimes called a synthetic long.
This is an investment strategy that amounts to both buying and selling out-of-money options simultaneously.
Risk reversal can refer to the manner in which similar out-of-the-money call and put options, usually foreign exchange options, are quoted by finance dealers.