Exotic Options is a catch-all term applied to describe Options contracts which have unconventional characteristics or features when compared with American Style or European Style contracts. They are also sometimes referred to as hybrid Options.
There are a wide range of exotic Options, some examples include digital (or binary) Options which expire with only one of two outcomes being In The Money, Asian Options where the payoff is based on a average price measured over time, or basket Options which are derived from multiple Underlying instruments, rather than just one.
Contributed by: Ralph Windsor
There are a wide range of exotic Options, some examples include digital (or binary) Options which expire with only one of two outcomes being In The Money, Asian Options where the payoff is based on a average price measured over time, or basket Options which are derived from multiple Underlying instruments, rather than just one.
External Links
5 Examples of Exotic Optionshttp://traderhq.com/5-examples-exotic-options/
This piece describes five exotic options, including compound options, barrier options, lookback options, chooser options and rainbow options.
Why Do We Call Financial Instruments "Exotic"?http://www.slate.com/articles/news_and_politics/explainer/2010/07/why_do_we_call_financial_instruments_exotic.html
Article speculating where exotic options might have acquired their name from.
Exotic optionhttps://en.wikipedia.org/wiki/Exotic_option
Wikipedia article describing exotic options.
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