Refers to options that are more complex than simple puts or call options. For example, a Caput is a call option on a put option.
It is used to describe any non-standard (European or American) option. Exotic options are written over-the-counter (OTC), meaning that a broker usually brings together both sides of the contract and constructs a product that meets his client's needs. These options can be digitals, quantos, spread options, lookback options, Asian options, barrier options, etc.
any option whose payout structure is more complicated than a plain-vanilla put or call option. Examples of exotic options include Asian options, barrier options, digital options and spread options. see also option, vanilla options
This type of option can be customized and its payoff can be dependent upon any factors that are pre-specified by the option holder. Each structure is unique and can be designed differently.
Any of a wide variety of options with unusual underlying assets or terms. For example, rainbow options depend on the amount by which one asset outperforms another.
A range of options with unconventional payout structures and underlying securities/commodities.
Any of a wide variety of options with unusual underlying, strike price calculations, strike price determinations, payoff mechanisms or expiration conditions.
In finance, an exotic option is a derivative which has features making it more complex than commonly traded products (vanilla options). These products are usually traded over-the-counter (OTC), or are embedded in structured notes.