A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Options Trading Terms: F
FAST MARKET:
The exchange declares trading in stocks or options to be in a "fast market" when transactions in the pit occur in such volume and with such rapidity that price reporters are behind in entering quotes. During this time, executing brokers are not held to any fills if a price is traded through on a limit order.
FED FUNDS (FEDERAL FUNDS):
The money a bank borrows from another to meet its overnight reserve requirements.
FED FUNDS RATE:
Set by the Federal Reserve Board, the Fed Funds Rate is the rate banks charge each other on overnight loans held the Federal Reserve Bank.
FEDERAL OPEN MARKET COMMITTEE (FOMC):
A committee of the Federal Reserve Board which operates by buying and selling government securities in the open market. This buying and selling is how the Federal Reserve Board controls the U.S. money supply. The FOMC decides whether to change the discount rate or not.
FEDERAL RESERVE BOARD (FRB):
A seven-member board of governors of the Federal Reserve System, appointed by the U.S. President and confirmed by the Senate, that is responsible for monetary policy within the United States. It controls the supply of money and credit to try to control inflation and create a stable, growing economy.
FENCE:
An option and stock position consisting of long stock, long an out-of-the-money put and short an out-of-the-money call, which emulates a bull spread. Alternatively, a reverse fence can be long stock, long in-the-money put and short in-the-money call which emulates a bear spread. All the options have the same expiration date.
FILL:
The result of executing an order.
FILL OR KILL (FOK):
A type of order that is canceled unless it is executed completely within a designated time period, generally as soon as it is announced by the floor broker to the traders in the pit. Compare to all-or-none (AON).
FINANCIAL INDUSTRY REGULARY AUTHORITY (FINRA):
Regulatory authority responsible for overseeing brokers and dealers in the securities business (changed its name from "NASD" in July 2007.)
FLAT:
Used to describe an account that has no open positions in stocks or options. Flat can also be regarding a position with little or no delta or gamma.
FLOAT:
Number of shares of stock of a corporation that available for public trading.
FLOOR:
Physical location of an exchange where the buying and selling of stocks or options takes place.
FLOOR BROKER:
A member of an exchange who executes orders on the exchange floor for clearing members or their customers.
FLOOR TRADER:
A member of an exchange who trades only for his own or proprietary account. On the CBOE, they are known as "market makers".
FREE CREDIT BALANCE:
The amount of cash in a customers account. Broker-Dealers are required to notify customers of their free credit balances at least quarterly, however, Thinkorswim customers may access this information at any time.
FROZEN ACCOUNT:
An account which requiring cash in advance for a buy order to be executed or securities in hand before a sell order is executed. In most cases Thinkorswim customers whose accounts are frozen will be restricted to closing transactions only. (FINRA)
FULL POWER OF ATTORNEY:
A written authorization for someone other than the beneficial owner of an account to execute trades, make deposits or withdrawals in a customer account. (FINRA)
FULL TRADING AUTHORIZATION:
An authorization, usually provided by a full power of attorney, which gives someone other than the customer full trading privileges in the account. (FINRA)
FUNDAMENTAL RESEARCH:
Analysis of companies based on such factors as revenues, expenses, assets, debt level, earnings, products, management, and various financial ratios. As is relates to the economy, fundamental research includes analysis of gross national product, interest rates, unemployment, savings, etc.
FUNDAMENTALS:
Factors that are used to analyze a company and its potential for success, such as earnings, revenues, cash flow, debt level, financial ratios, etc.
FUNGIBILITY:
Interchangeability resulting from identical characteristics or value. Options on a stock with the same expiration date, type (call or put) and strike price as standardized by the Options Clearing Corporation (OCC) are fungible. Therefore, dual-listed options traded on the CBOE can be liquidated or closed on the AMEX.
FUTURE(S) CONTRACT:
A forward contract for the future delivery of a financial instrument (ex. Treasury bond) or physical commodities (corn), traded on a futures exchange (ex. CBOT, CME).
Michael Shulman
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