An option for which the underlying is another option. Therefore, there are two strike prices and two exercise dates.

These are the four types of compound options: This type of option usually exists for currency or fixed-income markets, where an uncertainty exists regarding the option's risk protection capabilities. The advantages of compound options are that they allow for large leverage and they are cheaper than straight options.

Put On A Call

However, if both options are exercised, the total premium will be more than the premium on a single option. Dictionary Term Of The Day. A measure of what it costs are you baffled by binary options we have an guide investment company to operate a mutual fund.

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Sophisticated content for financial advisors around investment strategies, put on call compound option trends, and advisor education. Put On A Call Call On A Put Call On A Call Back Fee Front Fee Exercise Price European Option Lookback Option Out Of The Money - OTM.

Does put-call parity hold for a compound option with underlying American option? - Quantitative Finance Stack Exchange

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