front fee

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Front fee

The fee initially paid by the buyer upon entering a split-fee option contract.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Front Fee

In a compound option, the premium one pays on the first option contract. A compound option is an option on another option. For example, one may buy a call on a put, which is an option to buy an option to sell some underlying asset. An investor buying a compound option pays a premium on the first option but does not pay a premium on the second option unless the first option is exercised (if it is exercised). This first premium is the front fee. See also: Back Fee.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

front fee

The payment made to acquire a compound option. A second payment must be made in the event the compound option is exercised. Compare back fee.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Instead a subsidised level of loans, enough to cover tuition fees, could uphold the "no up front fees" principle, the report said.
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Research by the Higher Education Policy Institute (HEPI) said abolishing up front fees could cost the taxpayer pounds 1.6bnin 2010.
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