Definition of 'Fungibles'
Fungible instruments are useful for closing out positions that traders do not want to carry to expiration. A good example of fungible instruments are put and call contracts. If for example you hold a call option (you bought a long call) at a strike price of $50 for June 2008 expiration, then you can close out that position by selling a put option (writing a put) with a strike price of $50 for June 2008 expiration. Of course these options need to be for the same underlying company, commodity, future or currency.
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