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Topic: Exotic option

	OptionTradingpedia.com - Your Free Online Option Trading Encyclopedia
		As stock options are meant to be a hedging tool in the first place, it is also a great way to protect your stocks from dropping in value by buying the same number of put options as the number of shares that you own.
		A put option is a financial contract between two parties, the buyer and the seller, of a put option based on an underlying asset.
		In option trading, the only good measure of stock option liquidity is therefore how quickly the market makers are willing to trade with you in the absence of another corresponding option trader.
	www.optiontradingpedia.com (4615 words)

	Option - Wikipedia, the free encyclopedia
		Most often the term "option" refers to a type of derivative which gives the holder of the option the right but not the obligation to purchase (a "call option") or sell (a "put option") a specified amount of a security within a specified time span.
		European options and American options on stock and bonds are usually considered to be "plain vanilla." Asian options, lookback options, barrier options are often considered to be exotic, especially if the underlying instrument is more complex than simple equity or debt.
		Employee stock options are also widely used as a compensation vehicle for employees and, in particular, senior executives of publicy traded corporations.
	en.wikipedia.org /wiki/Option (2315 words)

	Exotic option - Wikipedia, the free encyclopedia (Site not responding. Last check: )
		In finance, an exotic option is a derivative which has features making it more complex than commonly traded products (vanilla options).
		Even products traded actively in the market can have the characteristics of exotic options, such as convertible bonds, whose valuation can depend on the price and volatility of the underlying equity, the credit rating, the level and volatility of interest rates, and the correlations between these factors.
		Exotic options can pose challenging problems in valuation and hedging.
	en.wikipedia.org /wiki/Exotic_option (200 words)

	Forex Exotic Currency Options Glossary Fx Options Dictionary Foreign Exchange Options (Site not responding. Last check: )
		This type of option is generally quite expensive because of the flexibility afforded to the buyer.
		The down and in option is the same as the up and in, except the currency has to reach a lower barrier.
		In the otc exotic option market, the participant may choose and structure the contract as desired.
	www.forexdirectory.net /exover.html (1292 words)

	Exotic options in power by Anne Ku at analyticalQ
		Electric power is a compound option, for energy from a power plant is an option on the capacity, which itself is an option on the input fuels.
		Petros Fanis, senior options trader at EDF Trading in London sees the current liquidity crisis a result of companies that had over-expanded, got it wrong, and are now returning to their core business.
		Exotic options in power are not used for speculation, in contrast to those in foreign exchange and equity markets, says Carlos Blanco, VP at FEA, Berkeley, Ca.
	www.analyticalq.com /energy/exotic (1875 words)

	Jet Investments Currency Option model 1/2
		Options on currencies were designed not as a substitute for forward or futures markets but as a new, additional and versatile financial vehicle that can offer significant opportunities and advantages to those seeking either protection or investment profit from changes in exchange rates.
		Currency options may be quoted in one of two ways: American-terms, in which a currency is quoted in terms of the U.S. dollar per unit of foreign currency; and European-terms (inverse terms), in which the dollar is quoted in terms of units of foreign currency per dollar.
		An option position known as a "spread" is created by the purchase of one option with a given exercise and expiration, and the sale of the same class of option (a call or a put) with a different exercise price and/or expiration.
	www.jetinvest.com /docs/option_model_1.htm (4723 words)

	Types of Options (Site not responding. Last check: )
		The buyer of the collar purchases the cap option to limit the maximum interest rate he will pay and sells the floor option to obtain a premium to pay for the cap.
		With knockouts, the buyer begins with a vanilla option, however, if the predetermined price barrier is hit, the vanilla option is cancelled and the seller has no further obligation.
		The contract gives the buyer the option to execute an interest rate swap on a future date, thereby locking in financing costs at a specified fixed rate of interest.
	www.sp.uconn.edu /~jstiver/Eco230/options.htm (1926 words)

	Exotic Options in Finance KIT: A Host of Possibilities - Finance onLine - Volume 7 n3 (Site not responding. Last check: )
		Exotic options are either variations in the payoff profiles of plain vanilla options or a wholly different kind of product, with embedded 'optionality'.
		Unlike vanilla options, where the most practical way of calculating market value and risk is widely agreed upon, the potentially complex structures of exotic options mean that it is not possible to have one single formula that satisfies everyone.
		Option Admin has been implemented with the modular structure, which means that it will be easy to add new option-related activities.
	www.trema.com /finance_online/7/3/FK_ExoticOptions.html?7 (1130 words)

	Exotic Vacations \| Tropical Vacation
		Another option is to go for a wander in your local travel agent's office.
		These are often placed by travel companies that specialize in exotic, less popular destinations, and can give you more ideas to choose from.
		Many people find that an all-inclusive vacation is a great option, because once you get there, you don't have to worry about paying for everything as you go along.
	www.exoticvacationsweb.com (469 words)

	Derivatives Strategy - July'99: What’s Exotic? (Site not responding. Last check: )
		Exotic options were something to be discussed in hushed, reverential tones, since they were designed (and understood) solely by quants in white lab coats fresh from Defense Department jobs in Ronald Reagan’s Star Wars program.
		An exotic that has been around for three years and that is fairly typical of this new approach is the spot trader option.
		Since it is an installment option, many of these conditions relate to the level and frequency of the premium installments payable, so the dealer could (at the risk of permanently alienating the client) theoretically jack these up so the option buyer is effectively forced to abandon it—the ultimate game of exotic chicken.
	www.derivativesstrategy.com /magazine/archive/1999/0799fea1.asp (3376 words)

	FTS Forum
		The beauty of the binomial approach is that the same principles (i.e., riskless hedge, or synthetic option) still apply and provide a way to calculate the value of the option.
		Finally, leave American Option unchecked (i.e., we are valuing a European option) and leave volatility unchecked because we have specified the up- and down-tick directly.
		The call option has a strike price equal to 15 and is defined on the average stock price over the last partition ((20+40)/2=30).
	www.ftsnet.com /public/ftsmodhtm/ftsExotic/page1.htm (1202 words)

	What's the difference between a regular option and an exotic option?
		An investor who buys a call option has essentially bought a standardized right to purchase a specific amount of an underlying asset at the agreed upon strike price, while a put option gives the investor the right to sell the specific asset at the strike if the price of the underlying decreases.
		Unlike regular options that are purchased as a call or a put at inception, these exotic options can change during the life of the option.
		Exotic options are mainly traded over the counter, which means they are not listed on a formal exchange, and the terms of the options are generally negotiated by brokers/dealers and are not normally standardized as they are with regular options.
	www.investopedia.com /ask/answers/05/063005.asp (488 words)

	[No title]
		A type that is used for an option whose payout is based on the average of the price of the underlying over a specific period of time.
		For barrier and digital/binary options, it can be useful to include the spot rate at the time the option was executed to make it easier to know whether the option needs to move "up" or "down" to be triggered.
		Periodically, an average rate option agreement will be struck whereby some rates have already been observed in the past but will become part of computation of the average rate of the option.
	www.w3.org /XML/Binary/2005/03/test-data/FPML-4.0/fpml-fx-4-0.xsd (2954 words)

	Glossary - Quanto Financial Technology (Site not responding. Last check: )
		An option that is part of the structure of a bond.
		For a call option, this is the amount by which the strike price is below the underlying investment; for a put option, it is the amount by which the strike price is above the underlying investment.
		Exotic options are written over-the-counter (OTC), meaning that a broker usually brings together both sides of the contract and constructs a product that meets his client's needs.
	www.equanto.com /glossary/e.html (1768 words)

	INVESTING IN OPTIONS - Glossary (Site not responding. Last check: )
		Vanilla Option: A "plain vanilla option" is a regular option, the opposite of which is an "exotic option".
		Vertical Spread: The purchase of one Option and sale of one Option, where both Options are of the same type, have the same underlying contract, and expire at the same time, but have different strike prices (or exercise prices).
		Virtual Currency Option: An option that pays out as a function of a currency exchange rate and is denominated and settled in the investor's base currency, making it unnecessary to actually hold or take delivery of the foreign currency.
	www.investinginoptions.com /glossary_V.html (868 words)

	CyberTrader Review
		When derivatives traders discuss "exotic" option strategies, one strategy that is often mentioned is a butterfly.
		The option chain screen at the bottom displays the same information as on the regular "Options" chain tab, except the columns displayed can not be changed, and are limited due to space constraints.
		Options carry a high level of risk and are not suitable for all investors.
	www.cybertrader.com /cybertraderreview/v5i2/randy.htm (1548 words)

	Exotic Option
		For example, one type of exotic option is known as a chooser option.
		This instrument allows an investor to choose whether the options is a put or call at a certain point during the option's life.
		Because this type of option can change over the holding period, it is apparent that this type of option would not be found on a regular exchange, which is why it is classified as an exotic option.
	www.investopedia.com /terms/e/exoticoption.asp (353 words)

	Derivatives Strategy - November'99: The Sensitivity of Vega (Site not responding. Last check: )
		As exotics took off, it also became clear that the effect of vomma and vanna in certain parts of the exotic world was far more dramatic than in vanilla products.
		More generally, although traders were previously aware that the vega of options fluctuated over volatility and time, they began to recognize the need to pay attention to the cost of hedging those effects at the outset of a trade when making a price.
		This is because a 1 point rise in volatility increases the probability of the option being knocked out—resulting in the ultimate change in vega, a factor that obviously doesn’t apply in a vanilla situation.
	www.derivativesstrategy.com /magazine/archive/1999/1199fea1.asp (2612 words)

	CFO Europe
		Real options analysis is based on the observation, first made more than 20 years ago, that a company evaluating an existing asset or potential investment is in much the same position as the holder of a financial option, such as those written on stocks or commodity prices.
		Real options practitioners have to overcome two major obstacles: first, they have to find a number to put on the real option value; and second, they have to persuade their organisations to change the way they think about valuation and investment.
		Back then, pricing each new exotic option was a long and arduous task, but today "you can more or less buy a handbook that gives you the basic formula for one type of option on each page," he says.
	www.cfoeurope.com /199908e.html (6122 words)

	Savvysoft - A New Spin on Software
		A corporate treasurer who has bought, or is looking to buy, an exotic OTC option can only get prices by phone from the big dealers who offer such an option.
		A price for various option structures is attained by plugging several terms into a model menu, such as strike price, expiration and volatility assumptions.
		Options are in a sense the building-blocks of nearly all types of derivatives, no matter how complex.
	www.savvysoft.com /dowjones.htm (753 words)

	Exotic Options Information at Business.com
		Description of this type of option where the swaption only comes alive, or knocks in, when some defined barrier is reached during, or at the end, of the option period.
		Description of this type of option where the strike is periodically reset when the underlying trades through specified trigger levels, at the same time locking in the profit between the old and the new strike.
		Description of this type of option where, once the trigger is reached, the original cap level is replaced with a second cap level for that period.
	www.business.com /directory/financial_services/investment_banking_and_brokerage/sales_and_trading/options/exotic_options (1695 words)

	A New Market-Based Exchange Rate Mechanism
		Clearly, the option is almost worthless: why spend ¥200 on a pound (by exercising the option) when a pound can be bought at the cheaper price of ¥180 in the market.
		But if the pound were to appreciate to ¥200, the option would increase in value substantially, and if sterling were to increase to ¥210, then the option would be worth at least ¥10.
		The PDF version includes, as an appendix, a description of an exotic option use of which would improve the effectiveness of this FX regime.
	www.jdawiseman.com /papers/finmkts/fx_opt.html (1764 words)

	Innova Financial Solutions: Derivatives Expert (Site not responding. Last check: )
		The theoretical prices, implied volatilities, elasticities and the first and second order partial derivatives of the option pricing functions with respect to each of the arguments of the option pricing function are implemented in the Black Scholes module.
		The theoretical prices, implied volatilities, elasticities and the first and second order partial derivatives of the option pricing functions with respect to each of the arguments of the option pricing function are implemented in the Black76 module.
		Quoting directly from the paper: "The exact nature of the underlying commodity varies, and may be anything from a precious metal such as gold or silver to a financial instrument such as a Treasury Bond, foreign currency, or a constant dividend paying stock".
	www.ifs.dk /DerivativesExpert/summary/options/options.html (1164 words)

	[No title] (Site not responding. Last check: )
		We price Exotic options using ATM volatility curve and interest rate term structure.
		The graph function plots all option columns on the displayed sheet that are enabled.
		If you enter different expiration dates on option columns, the graphs show all option values to the earliest expiration date.
	www.csfb.com /locus/help/helppages/fx_exotic_pricer.htm (590 words)

	log bed, log headboard, rustic bed, exotic bed (Site not responding. Last check: )
		Exotic log furniture is some of the most beautiful furniture in the world.
		Our exotic wood option will add extra knots, worm holes, curves or other characteristic markings and is also available on any of our hand-peeld beds with the exception of our bunkbeds which we do not build exotic due to top bunk safety concerns.
		Options: For a description of other custom options available, including additional rungs, rails, slats, dowels, poster beds or finishing, please visit our add-ons page.
	www.thegoodtimber.com /exoticbed.htm (291 words)

	Exotic Cars
		Exotic cars like the ones presented on this site can only be found behind a glass window or exposed at car shows.
		Now there is another option, this site was created to present brief technical information, engine specifications and photo quality pictures of exotic cars.
		Our goal is to select images of the fastest exotic cars as well as the most powerful cars on the planet.
	www.exoticcars.ws (77 words)

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