Exotic option

Definition:

Refers to options that are more complex than simple put or call options. For example, a Caput is a call option on a put option. Exotic options trade over-the-counter.

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Risk controlled arbitrage

A self-funding, self-hedged series of transactions that generally use mortgage securities (MBS) as the primary assets.

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