Best To Deliver

In trading, to go "short" something is to bet against it. If you short a stock, you think the stock will go down in value. The mechanics of the short involves borrowing the security from someone else, selling it at current prices, then looking to rebuy the security at a later date, hopefully at a lower price. Then, once you've bought the security back, you can return it to the person or company that loaned it to you in the first place.

Stocks aren't the only thing that can get shorted. You can short bonds as well. Bonds, however, come in variety of types. They have different durations and different yields (a 10-year bond at 5% vs. a 15-year bond at 8%, etc.). With all this variety, an investor involved in a short has a lot of choices about what they will buy back in order to close the short.

That's where "best to deliver" comes in. This terminology designates what type of bond is acceptable to deliver in order to close out a short position. It represents an agreement between the parties about what the person running the short will return to the bond owner once the position has run its course.

The term also refers to a Yelp-like ranking of surgeons who are specialists in removing the liver. But that's different.