exotic option


Also found in: Wikipedia.

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

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.

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.
References in periodicals archive ?
mag that she was the one who chose the exotic option to follow Lilly and Lexie.
The model parameters are estimated at the current time from market prices of traded assets and a replicating portfolio is established for a particular exotic option based on the model under consideration.
No market is as characterized by exotic option structures, volume options, spread options, caplets and floorlets, barriers and swing options as is power.
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.
A more exotic option is spending Christmas in the Caribbean with a 17-night jaunt from pounds 2,340.
Handgun optics are no longer an exotic option used by competition shooters and handgun hunters.
The usefulness of a discrete-time model for a specific kind of exotic option contract depends not only on the numerical accuracy, but also on the computer time needed for calculations.
RETAILERS at Ellesmere Port outlet centre Cheshire Oaks have chosen the exotic option to exploit new sales opportunities.
Holiday bookings for Oman are also increasing and Kuoni said the country represented a "more cultural and exotic option to Dubai", at better value.
It allows fully automated portfolio management for exotic option portfolios, and easy tracking of banks' clients trades, executed with the bank.
Unlike U2's Larry Mullen, who called his son Elvis, Irish parents are going for less exotic options.
Includes expanded coverage of the currency crises and capital controls, electronic trading, forward contracts, exotic options, and more