ETF (Exchange-Traded Fund)
A basket of many stocks (or bonds) that trades like a single stock.
An ETF holds dozens or thousands of investments and trades under one ticker, so buying one share gives you instant diversification. Broad index ETFs cannot go to zero on a single company’s bad news, which makes them safer to own (and to wheel) than any one stock. The trade-off is lower volatility, and therefore thinner option premium.
For example
Buying one share of a broad market ETF gives you a tiny slice of 500 companies at once, instead of betting on any single one.
Related terms
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