Fence (Options Strategy)
Definition
A zero-cost collar variation that limits both upside and downside using options, often used by corporations for hedging. Involves buying a put and selling a call to create a defined risk range.
Example
A fence sets a floor and ceiling on a currency or commodity exposure without paying net premium.
Related Terms
Frequently Asked Question
What is a Fence in options trading?
A fence is a zero-cost collar variation: buy a put (downside protection) + sell a call (upside limit). Creates a defined risk band, commonly used by corporations to hedge commodity or currency exposure.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.