FRM 2 - Market Exotic options

anbu.edu
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FRM 2 - Market Exotic options

Postby anbu.edu » Sun Mar 02, 2014 5:33 am

Can anybody explain cliquet options with an example.

pradeeppdy
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Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

FRM 2 - Market Exotic options

Postby pradeeppdy » Tue Mar 04, 2014 6:34 am

It settles periodically and in it we reset the strike price on each settlement. For example: -
We have a cliquet option for the 4 years and for the first year we have a strike price let say $1500 but for the first year option expire worthless with spot of $1200. So we took this $1200 for the next year strike price and so on.

Hope this is clear if not please let me know.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

FRM 2 - Market Exotic options

Postby pradeeppdy » Thu Apr 03, 2014 7:51 am

It is an option that differs from normal European and Americal options in terms of the payoff.These the chooser options and give the option holder the choice to select from Call or put option. These are not traded on an exchange and generally are over the counter.


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