CHAPTER 23Special Factors Relating to LEAPS and Index LEAPS Options

EXOTIC OPTIONS

Not here in the listed world! Listed options have standardized characteristics; strike prices, expiration dates, etc. Exotic options typically have one or more very unusual features—so unusual, in fact, that you may never see or employ an exotic option strategy.

An example of an exotic option is a Bermuda-style exercise option. You are familiar with American-style options (which may be exercised at any point up to and including expiration Friday) and European-style options (where no early exercise before expiration is allowed). If you can find Bermuda on a map, you will see that it is in between America and Europe. Bermuda-style options, as you would expect by ...

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