It stands for forward-starting CDO; a single-tranche CDO (an exotic CDO product) with a premium starting at a pre-specified time in the future. It involves an investor selling credit protection on a CDO tranche starting at a future date and extending to the maturity date. Over the period between value date and maturity date, the product becomes a standard CDO.

FCDOs come in two main types: FCDOs on fixed CDO tranche on the intial names (or reference entities or assets) and FCDOs on names having survived up to the forward-starting date.