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.
References in periodicals archive ?
They also have many advantages compared to other options that allow their holders to << lock in >> positive intrinsic values prior to expiry, such as ladder or shout options.
In Section II, the specific properties of cliquet options are highlighted, in comparison with alternative contracts traded in the markets such as lookback, ladder and shout options.
Also, shout options require steady monitoring and a lot of investors do not want to dedicate too much of their time to manage their option position.