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After completing this reading, you should be able to:
- Define and contrast exotic derivatives and plain vanilla derivatives.
- Describe some of the factors that drive the development of exotic products.
- Explain how any derivative can be converted into a zero-cost product.
- Describe how standard American options can be transformed into nonstandard American options.
- Identify and describe the characteristics and payoff structure of the following exotic options: gap, forward start, compound, chooser, barrier, binary, lookback, shout, and Asian, exchange, rainbow, and basket options.
- Describe and contrast volatility and variance swaps.
- Explain the basic premise of static option replication and how it can be applied to hedging exotic options.
23 июл 2024
