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Master's Thesis from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University Of Wales Institute, Cardiff, language: English, abstract: The foreign exchange market is the worlds largest market with daily turnover exceeding trillions. With non-stop trading opportunities from Monday to Friday one can take advantage of several profitable set ups within the week. This can be done either by analyzing the fundamentals or technicals of underlying currency pairs. Options present one with the added advantage that one's risk is limited to the amount invested. This study looks at the advantages of exotic options as a tool in Forex trading. By taking the buy-sell decision out of the equation these options offer some key advantages over their regular counterparts.
The recent financial crisis brought to light many of the misunderstandings and misuses of exotic derivatives. With market participants on both the buy and sell-side having been found guilty of not understanding the products they were dealing with, never before has there been a greater need for clarification and explanation. Exotic Options and Hybrids is a practical guide to structuring, pricing and hedging complex exotic options and hybrid derivatives that will serve readers through the recent crisis, the road to recovery, the next bull market and beyond. Written by experienced practitioners, it focuses on the three main parts of a derivative’s life: the structuring of a product, its pricing and its hedging. Divided into four parts, the book covers a multitude of structures, encompassing many of the most up-to-date and promising products from exotic equity derivatives and structured notes to hybrid derivatives and dynamic strategies. Based on a realistic setting from the heart of the business, inside a derivatives operation, the practical and intuitive discussions of these aspects make these exotic concepts truly accessible. Adoptions of real trades are examined in detail, and all of the numerous examples are carefully selected so as to highlight interesting and significant aspects of the business. The introduction of payoff structures is accompanied by scenario analysis, diagrams and lifelike sample term sheets. Readers learn how to spot where the risks lie to pave the way for sound valuation and hedging of such products. There are also questions and accompanying discussions dispersed in the text, each exploited to illustrate one or more concepts from the context in which they are set. The applications, the strengths and the limitations of various models are highlighted, in relevance to the products and their risks, rather than the model implementations. Models are de-mystified in separately dedicated sections, but their implications are alluded to throughout the book in an intuitive and non-mathematical manner. By discussing exotic options and hybrids in a practical, non-mathematical and highly intuitive setting, this book will blast through the misunderstanding of exotic derivatives, enabling practitioners to fully understand and correctly structure, price and hedge theses products effectively, and stand strong as the only book in its class to make these “exotic” concepts truly accessible.
This is the first systematic and extensive book on exotic options. The book covers essentially all popular exotic options currently trading in the Over-the-Counter (OTC) market, from digitals, quantos, spread options, lookback options, Asian options, vanilla barrier options, to various types of exotic barrier options and other options. Each type of exotic options is largely written in a separate chapter, beginning with the basic concepts of the products and then moving on to how to price them in closed-form solutions. Many pricing formulae and analyses which have not previously appeared in the literature are included and illustrated with detailed examples. It will be of great interest to traders, marketers, analysts, risk managers, professors, graduate students, and anyone who is interested in what is going on in the rapidly changing financial market.
Written by an experienced trader and consultant, Frans de Weert’s Exotic Options Trading offers a risk-focused approach to the pricing of exotic options. By giving readers the necessary tools to understand exotic options, this book serves as a manual to equip the reader with the skills to price and risk manage the most common and the most complex exotic options. De Weert begins by explaining the risks associated with trading an exotic option before dissecting these risks through a detailed analysis of the actual economics and Greeks rather than solely stating the mathematical formulae. The book limits the use of mathematics to explain exotic options from an economic and risk perspective by means of real life examples leading to a practical interpretation of the mathematical pricing formulae. The book covers conventional options, digital options, barrier options, cliquets, quanto options, outperformance options and variance swaps, and explains difficult concepts in simple terms, with a practical approach that gives the reader a full understanding of every aspect of each exotic option. The book also discusses structured notes with exotic options embedded in them, such as reverse convertibles, callable and puttable reverse convertibles and autocallables and shows the rationale behind these structures and their associated risks. For each exotic option, the author makes clear why there is an investor demand; explains where the risks lie and how this affects the actual pricing; shows how best to hedge any vega or gamma exposure embedded in the exotic option and discusses the skew exposure. By explaining the practical implications for every exotic option and how it affects the price, in addition to the necessary mathematical derivations and tools for pricing exotic options, Exotic Options Trading removes the mystique surrounding exotic options in order to give the reader a full understanding of every aspect of each exotic option, creating a useable tool for dealing with exotic options in practice. “Although exotic options are not a new subject in finance, the coverage traditionally afforded by many texts is either too high level or overly mathematical. De Weert's exceptional text fills this gap superbly. It is a rigorous treatment of a number of exotic structures and includes numerous examples to clearly illustrate the principles. What makes this book unique is that it manages to strike a fantastic balance between the theory and actual trading practice. Although it may be something of an overused phrase to describe this book as compulsory reading, I can assure any reader they will not be disappointed.” —Neil Schofield, Training Consultant and author of Commodity Derivatives: Markets and Applications “Exotic Options Trading does an excellent job in providing a succinct and exhaustive overview of exotic options. The real edge of this book is that it explains exotic options from a risk and economical perspective and provides a clear link to the actual profit and pricing formulae. In short, a must read for anyone who wants to get deep insights into exotic options and start trading them profitably.” —Arturo Bignardi
This is a practical and up-to-date guide to the valuation and hedging of standard exotic options. It explores each type of option in detail and should be useful for all those who need clearer practical understanding of this area of high finance.
"In describing the major types of exotic options Pricing, Hedging, and Trading Exotic Options also reveals their key applications.
Table of Contents
How would it feel to work minimum hours and still make thousands of dollars every month?! In this book, you’ll learn how to generate and exponentially grow your income like never before with the help of options trading! Are you a beginner to options trading or someone who’s not currently making enough money? Do you need a straight-forward book that guides you towards the right path with valuable information and knowledge? Are you looking for content that is actually useful and applicable? You have come to the right place. Here you have a book with well-researched and high-quality content that is made to help you! Unlike most books out there, this one has got actual information that can be used and not a bunch of nonsense/fluff just to fill out the pages. What you will find in this book is a one-time investment that is guaranteed to benefit you for a lifetime! Take action now! A Short Preview: Options Trading Basics Options Trading System Market Trend Analysis for Options Trading Advantages and Disadvantages Of Options Trading Benefits Of Online Trading Stock Market Guides For The Beginner Options Trader Options Trading Strategies Options Trading Risks Much Much More Why This Book Is The Right Choice For You As an already successful investor and trader, I know what works and what doesn’t. The knowledge I have today is based on years of research, trial, and error, lessons learned and tons of profits made. I’m not some random guy who was bored an evening and decided to write a book based on the information I found on Wikipedia. I have been in the game for a long time and I know what I’m doing. In this book, you’ll find what you actually need to know. Truth be told, you will not become a millionaire the next day after reading this book. If that is what you’re looking for, you should look elsewhere. Any wise person would know that building wealth takes time. You either choose to buy into the get-rich-quick-schemes that are out there or you change your mindset, realize that overnight tickets to riches doesn’t exist and put in some work instead. This book, however, will make sure to give you a head-start and take you there much faster! GET Your Own Copy Today! Act NOW! Don't wait for the perfect opportunity! Trading options is an effective way of making money! Your time, however, will run out eventually if you do not act soon. Taking action is a key component in becoming successful in building wealth or just achieving financial freedom! Want to know what the best part about options trading is? The absolute best part about options trading is the fact that you earn the money via the internet. With that being said, you can basically travel the world, be wherever you want to be and to whatever you want to do while still making money through your laptop! Scroll up and GET your own personal copy now!
Exotic options and structured products are two of the most popular financial products over the past ten years and will soon become very important to the emerging markets, especially China. This book first discusses the products' recent development in the world and provides comprehensive overview of the major products. The book also discusses the risks of issuing and buying such products as well as the techniques to price them and to assess the risks. Volatility is the most important factor in determining the return and risk. Therefore, significant part of the book's content discusses how we can measure the volatility by using local and stochastic volatility models — Heston Model and Dupire Model, the volatility surface, the term structure of volatility, variance swaps, and breakeven volatility. The book introduces a set of dimensions which can be used to describe structured products to help readers to classify them. It also describes the more commonly traded exotic options with details. The book discusses key features of each exotic option which can be used to develop structured products and covers their pricing models and when to issue such products that contain such exotic options. This book contains several case studies about how to use the models or techniques to price and hedge risks. These case analyses are illuminating.