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In financean exotic option is an option which has features making it more complex than commonly traded vanilla opciones trading otc. 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 for a particular client or for a particular market. Exotic options are more complex than options that trade on an exchange, and are generally traded over the counter OTC.

The term "exotic option" was popularized by Mark Rubinstein 's working paper publishedwith Eric Reiner "Exotic Options", with the term based either on exotic wagers in horse racingor due to the use of international terms such as "Asian option", suggesting the "exotic Orient".

Palmer compared these horse racing bets to the controversial emerging exotic financial instruments that concerned then-chairman of the Federal Reserve Paul Volcker in He argued that just as the exotic wagers survived the opciones trading otc controversy so will the exotic options.

InBankers Trust Mark Standish and David Spaughton, were in Tokyo on business when "they developed the first commercially used pricing formula for options linked to the average price of crude opciones trading otc. Exotic options are often created by financial engineers and rely on complex models to price them.

A straight call or put option, either American opciones trading otc Europeanwould be considered non-exotic or vanilla option. An exotic option could have one or more of the following features:. Even products traded actively in the market can have the characteristics of exotic options, such as convertible bondswhose valuation can depend on the price and volatility of the underlying equitythe credit ratingthe opciones trading otc and volatility of interest ratesand the correlations between these factors.

Barriers in exotic option are determined by the underlying price and ability of the stock opciones trading otc be active or inactive during the trade period, for instance up-and —out option has a high chance of being inactive should the underlying price go beyond the marked barrier.

Down-and-in-option is very likely to be active should the underlying prices of the stock go below the marked barrier. Up-and-in option is very likely to be active should the underlying price go beyond the marked barrier. From Wikipedia, the free encyclopedia. Because some of them are from Japan". Retrieved 9 Opciones trading otc The article quotes then-chairman of the Federal Reserve Paul Volcker in when he argued, "This is hardly the time to search out for new exotic lending areas or to finance speculative or purely financial activities that have little to do with the performance of the American economy.

Working Paper, University of California at Berkeley. Managing Energy Price Risk. Retrieved 11 July Retrieved April 15, Energy derivative Freight derivative Inflation opciones trading otc Property derivative Weather derivative. Retrieved from " https: Mathematical finance Options finance. Pages using div col without cols and colwidth parameters. Views Read Edit View history. This page was last edited on 10 Octoberat By using this site, you agree to the Terms of Use and Privacy Policy.

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