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Exotic Option

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Exotic option
Refers to options that are more complex than simple put or call options. For example, a Caput is a call option on a put option. Exotic options trade over-the-counter.

exotic option
An option with a nonstandard feature. A lookback option that allows the owner flexibility in selecting an exercise price is an example of an exotic option. Exotic options are traded in the over-the-counter market.

Exotic Option
Any option contract that is not an American or European option. That is, an exotic option contains some provision that makes it different from a straightforward option contract with a strike price, underlying asset, and expiration date. For example, a chooser option allows the holder to decide whether the contract is a call or a put at some point over the contract?s life. Also, an Asian option has no set strike price and is calculated as the average of some price listed in the contract and the market value of the underlying asset at the time of exercise. Most exotic options trade over-the-counter because their provisions make them too complex for the regulations of exchanges.


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In addition to adding support for credit derivatives, the software offers expanded coverage of convertible bonds, foreign exchange options and interest rate derivatives, new support for municipal bonds and expanded coverage of exotic option models.
The service's width and depth of coverage in the number and variety of exotic options as well as in the markets and currencies covered is unparalleled and extremely impressive.
Currenex subscribers can also sub scribe to premium FENICS services, including the ability to price exotic options and use third-party mathematical models, as well as near-time volatility, spot and forward price feeds.
 
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