Fungibles

Fungibles

Goods, securities or instruments that are equivalent and, therefore, interchangeable. In other words, they are goods that consist of many identical parts which can be easily replaced by other, identical goods. If the goods are sold by weight or number, this is a good sign that they are fungible.

Notes:

Commodities, common shares, or the same company, and dollar bills are examples of fungibles. Fungibility of listed options makes it possible for buyers and sellers to close out their positions by taking offsetting positions. For example, if you buy a long call option, you can close out the position by selling (writing) a put option with the same underlying, expiration date and strike price.

See also: Call Option, Expiration Date, Fungibility, Offset, Option, Put Option, Strike Price, Underlying