Exotic derivatives
Encyclopedia
Exotic derivatives refers to a specific type of financial asset.
See also Exotic option
- DerivativesDerivative (finance)A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
are assets whose value depends on another underlyingUnderlyingIn finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the derivative depend on the value of this underlying...
asset. - ExoticExoticExotic can mean:*In mathematics:**Exotic R4 - differentiable manifold homeomorphic but not diffeomorphic to the Euclidean space R4**Exotic sphere - differentiable manifold homeomorphic but not diffeomorphic to the ordinary sphere*In physics:...
as opposed to vanillaVanillaVanilla is a flavoring derived from orchids of the genus Vanilla, primarily from the Mexican species, Flat-leaved Vanilla . The word vanilla derives from the Spanish word "", little pod...
refers to the fact that the payoff is not standard, as is the case for a regular call option.
See also Exotic option
Exotic option
In finance, an exotic option is a derivative which has features making it more complex than commonly traded products . These products are usually traded over-the-counter , or are embedded in structured notes....