volatility and exotic products
Educational articles in this subcategory.
Volatility Surface Construction Techniques
# Volatility Surface Construction Techniques The implied volatility surface maps option prices across strikes and maturities into a coherent fram...
Volatility Futures and Options (VIX) Overview
# Volatility Futures and Options (VIX) Overview VIX futures and options allow investors to trade market volatility directly, rather than indirect...
Variance and Volatility Swap Mechanics
# Variance and Volatility Swap Mechanics Variance swaps and volatility swaps provide pure exposure to realized volatility without the directional...
Valuing Exotics with Monte Carlo Methods
# Valuing Exotics with Monte Carlo Methods Monte Carlo simulation prices derivatives by simulating thousands of possible price paths, calculating...
Tail Risk Hedging with Exotics
# Tail Risk Hedging with Exotics Exotic options can provide more cost-effective tail risk protection than vanilla puts by tailoring payoffs to sp...
Structured Notes Linked to Equity Baskets
# Structured Notes Linked to Equity Baskets Basket-linked structured notes provide exposure to multiple underlying assets within a single investm...
Regulatory Considerations for Structured Products
# Regulatory Considerations for Structured Products Structured products face a complex regulatory landscape spanning securities law, derivatives ...
Managing Volatility Premium Selling Strategies
# Managing Volatility Premium Selling Strategies Volatility premium selling harvests the difference between implied volatility (what options cost...
Hedging Complex Payoffs in Practice
# Hedging Complex Payoffs in Practice Hedging exotic options requires dynamic management of multiple risk factors, often with instruments that do...
Glossary: Exotic and Volatility Products
# Glossary: Exotic and Volatility Products This glossary provides definitions for key terms used in exotic options, volatility products, and stru...
Distribution Practices for Retail Note Offerings
# Distribution Practices for Retail Note Offerings Structured notes reach retail investors through a distribution network involving issuers, dist...
Dispersion Trades Using Options
# Dispersion Trades Using Options Dispersion trading exploits the relationship between index option volatility and single-stock option volatility...
Digital and Binary Options Explained
# Digital and Binary Options Explained Digital options (also called binary options) provide a fixed payoff if the underlying asset finishes above...
Correlation Trading and Basket Options
# Correlation Trading and Basket Options Correlation trading involves taking positions that profit from changes in how assets move together. Bask...
Convertible Bonds as Embedded Options
# Convertible Bonds as Embedded Options Convertible bonds combine debt characteristics with an embedded option to convert into equity at a predet...
Chooser and Compound Options
# Chooser and Compound Options Chooser options and compound options add an additional layer of optionality to standard options. Chooser options a...
Case Studies of Exotic Product Blowups
# Case Studies of Exotic Product Blowups Exotic derivatives have been involved in some of the largest trading losses in financial history. These ...
Barrier Options: Knock-In and Knock-Out Structures
# Barrier Options: Knock-In and Knock-Out Structures Barrier options are path-dependent derivatives whose existence or payoff depends on whether ...
Auto-Callable Notes and Yield Enhancers
# Auto-Callable Notes and Yield Enhancers Auto-callable notes are structured products that pay enhanced coupons and may redeem early if the under...
Asian and Lookback Option Structures
# Asian and Lookback Option Structures Asian options and lookback options are path-dependent derivatives whose payoffs depend on the price histor...