Options Glossary

Fence: A protective strategy in which a written call and a long put are added to a previously owned long stock position, also referred to as a collar. The options may have the same strike price or different strike prices. The expiration months may or may not be the same. For example, if the investor previously purchased XYZ Corporation at $46 and it rose to $62, an investor could establish a collar involving the purchase of a May 60 put and the writing of a May 65 call as a way of protecting some of the unrealized profit in the XYZ Corporation stock position. An investor might also use the reverse (a long call combined with a written put) if he has previously established a short stock position in XYZ Corporation.
Fill-or-kill order (FOK): A type of option order that requires that the order be executed completely or not at all. A fill-or-kill order is similar to an all-or-none (AON) order. The difference is that if the order cannot be completely executed (i.e., filled in its entirety) as soon as it is announced in the trading crowd, it is killed (cancelled) immediately. Unlike an AON order, an FOK order cannot be used as part of a good-‘til-cancelled order.
FINRA (Financial Industry Regulatory Authority): The largest independent regulator for all securities firms doing business in the United States.
First-Order Option Greeks: First Order Option Greeks are a set of mathematical calculations that measure the sensitivity of options to changes in various market factors, such as movement in the underlying price, Implied Volatility, time to expiration, and interest rates.
Floor broker: A trader on an exchange floor who executes trading orders for other people.
Floor trader: An exchange member on the trading floor who buys and sells for their own account.
Fundamental analysis: A method of predicting stock prices based on the study of earnings, sales, dividends, and so on.
Fungibility: Interchangeability resulting from standardization. Options listed on national exchanges are fungible, while over-the-counter options generally are not. Classes of options listed and traded on more than one national exchange are referred to as multiple-listed/multiple-traded options.