Business and Personal Finance Dictionary

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• FUTURES OPTION
  
  A listed option that settles into a Futures Contract (q.v.). A portfolio of two options with the same underlying risk factor and expiration date: a long call with a higher strike and a short put with a lower strike. An investor with long (short) exposure to the underlying factor can go short (long) a collar, retaining exposure to the factor within a range, while limiting downside exposure at the cost of upside potential.
  
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