ETF (Exchange-Traded Fund)

An exchange-traded fund (ETF) is a pooled investment security that trades on a stock exchange throughout the day at market-determined prices, typically tracking an index, sector, commodity, or other asset.

ETFs combine the diversification of a mutual fund with the trading flexibility of a stock. For options traders, ETFs like SPY, QQQ, and IWM offer the most liquid options markets in existence.

Further reading: Wikipedia