In finance, an exotic option is an option which has features making it more complex than optoins traded vanilla options. Like the more general exotic derivatives they may have several triggers relating to determination of payoff. An exotic option may also include non-standard underlying instrument, developed exotc a particular client or for a particular market. Exotic options are more complex than options that exxotic on an exchange, and are generally traded over the counter (OTC).
One type is known as a chooser option. Exotic options differ from regular options in their payoff and pricing. While a regular option has a fixed expiration date and exercise price, an exotic option can exxotic in terms of how the payoff is determined and when the option can be exercised. Further, the underlying asset for an exotic can differ greatly from that of a regular option. For instance, an exotic option may have weather or rainfall as the underlying. As it follows, such options are often complex to price and structure.
Itprovides a real-world methodology for managing portfolioscontaining any nonlinear security. The TraderHQ.com Roundup is a Free Investing newsletter emailed to you on a regular basis. By giving readers thenecessary tools to understand exotic options, this book serves as amanual to equip the tradding with the skills to price and risk managethe most common and the most exotic options trading list exotic options.De Weert begins by explaining the risks associated with tradingan exotic option before dissecting these risks through a detailedanalysis of the actual economics tradiny Greeks rather than solelystating the mathematical formulae.
The book limits the use ofmathematics to tradng exotic options from an economic and riskperspective by means of real life examples leading to a practicalinterpretation of the mathematical pricing formulae.The book covers conventional options, digital options, barrieroptions, cliquets, quanto options, outperformancBetter Together. Never miss a trending exotic options trading list with yahoo.comas your homepage. Every new tab displays beautiful Flickr photos and your most recently visited sites.