front fee

Front fee

The fee initially paid by the buyer upon entering a split-fee option contract.

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.

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.

单词	front fee
释义	front fee Front fee The fee initially paid by the buyer upon entering a split-fee option contract. 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. 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.
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