How Does Fungibility Applied in Options Market?

Any asset, commodity or property which indicates the interchangeability with another similar type of asset or commodity is termed as Fungible. Such fungible assets help in simplifying the trade due to an assumption of everyone valuing goods of same class as same value.

How Does Fungibility Applied in Options Market? 
There are several assets that display the fungibility feature. Example of such commodities includes No.2 yellow corn. In this case, it is immaterial as to where the growth of corn happens. All corn qualities falling in the category of No.2 yellow corn are valued at the same rate.

Even some cross listed shares fall in the category of fungible stocks as it becomes immaterial whether the purchase of such shares happens from foreign country or from home country. The essence remains that it is accepted as the stock of that particular company only.

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September 29, 2008 · Filed Under Stock Options Trading

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