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Shout Option

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Shout option

Shout Option
An option contract that allows the holder the opportunity at certain points in the life of the contract to lock in a certain profit while continuing the holder the contract. For example, if a contract is in the money by $10 per share at a given time, the option holder may "shout" or lock in the profit. This means that he/she will make at least $10 per share regardless of the future price movements of the underlying asset. If the option is only $5 in the money at expiration, the holder still makes $10 per share. On the other hand, if it is in the money by $15 per share at expiration, the holder can collect the higher profit. A shout option gives a great deal of flexibility to the option holder. It is a type of exotic option.


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