19
Exotic Options
LEARNING OBJECTIVES
After completing this chapter, you will be able to answer the following questions:
What are exotic options?
What are the differences between plain vanilla options and exotic options?
What are Asian options?
What are barrier options?
What are chooser options?
What are the other exotic options?
What are the problems associated with exotic options?
Box19.1 Playing with Fire
Companies in many emerging markets have entered into exotic foreign exchange derivatives contracts, which have resulted in massive losses. About 50,000 companies have been estimated to have made losses. The losses were incurred when the exchange rates moved in the wrong direction and the companies did not understand the risks involved ...
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