In finance, an exotic option is an option which has features making it more complex than commonly traded vanilla options. 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).
This document explores exotic options and includes the following topics:
- Bermudan Options
- Asian Options
- European Swaptions
This is part 22 of a 45-document course on Modeling Financial Markets.
