Exotic Option

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Offline munna99185

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Exotic Option
« on: June 25, 2015, 03:33:20 PM »
An option that differs from common American or European options in terms of the underlying asset or the calculation of how or when the investor receives a certain payoff. These options are more complex than options that trade on an exchange, and generally trade over the counter.
For example, one type of exotic option is known as a chooser option. This instrument allows an investor to choose whether the options is a put or call at a certain point during the option's life. Because this type of option can change over the holding period, it is not be found on a regular exchange, which is why it is classified as an exotic option. Other types of exotic options include: barrier options, Asian options, digital options and compound options, among others.
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Sayed Farrukh Ahmed
Assistant Professor
Faculty of Business & Economics
Daffodil International University


« Last Edit: June 25, 2015, 03:35:18 PM by munna99185 »