1. Definition
1. Definition of Exotic Options
An option that differs from common American or European options in terms of the underlying asset or the calculation of how or when the investor receives a certain payoff.
└>related to the features of Exotic Options, next slide
These options are more complex than options that trade on an exchange, and generally trade over the cou
Time value
Time value is, as above, the difference between option value and intrinsic value, i.e.
Time Value = Option Value - Intrinsic Value.
More specifically, an option's time value reflects the probability that the option will gain in intrinsic value or become profitable to exercise before it expires. An important factor is the option's volatility. Volatile prices of the underlying in
1. What is an "Exotic Options"?
option contracts that are variations on simple puts and calls or are different products with optionality built into them.
Exotic options are available in various asset classes on which options are available, but are mostly found in the foreign exchange market. A common example is the barrier option, which itself comes in various forms such as knock-in options
A shout option is one in which the long party can “shout” at the short party one time during the life of the option, which sets a sort of lower payoff level.
At maturity, the holder receives either the intrinsic value at the time of the shout, or the payoff to a usual European call/put (depending upon the type of option that it is.)
Assume that you “shout” at time tau, then your payout
Multi-asset Options
⑴ Definition
Multi-asset 옵션은 하나의 기초자산이 아닌 다수의 기초자산을 대상으로 하는 옵션이다. 금융시장에서 실제로 많은 예를 찾아볼 수 있는데, 그 한 가지 예로써 지수 옵션(index options)을 들 수 있다.
⑵ Examples of multi-asset options traded in the financial market
① Exchange options
- 어떤