Exotic Options

In finance, an exotic option is a derivative which has features making it more complex than commonly traded products (vanilla options). These products are usually traded over-the-counter (OTC), or are embedded in structured notes. Consider an equity index. A straight call or put, either American or European would be considered non-exotic (vanilla). An exotic product could have one or more of the following features: The payoff at maturity depends... [Read More...]

Binary Options

Binary options have recently come to the forefront when they were listed in the Chicago Board of Options Exchange (CBOE) in July of 2008.  Prior to this time, binary of digital options were traded actively in the over the counter market by institutional investors and major investment banks.  So what are Binary Options?  Binary options or digital options are “all of nothing “options which give the investor a fixed payout if the criteria of the... [Read More...]