What are plain vanilla options?

What are plain vanilla options?

Plain Vanilla Instruments A vanilla option gives the holder the right to buy or sell the underlying asset at a predetermined price within a specific timeframe. This call or put option comes with no special terms or features.

Where can I trade vanilla options?

Chicago Board Options Exchange
A vanilla option is a call option or put option that has no special or unusual features. Such options are standardized if traded on an exchange such as the Chicago Board Options Exchange.

What is plain vanilla swaps?

The term plain vanilla swap is most commonly used to describe an interest rate swap in which a floating interest rate is exchanged for a fixed rate or vice versa.

What is plain vanilla forward contracts?

Plain-vanilla forward contracts are a simple tool that any company can use to lock in foreign exchange rates on a future date. Profit in international trade should not be contingent on moves in foreign exchange rates.

How do exotic options differ from plain vanilla options?

An exotic option can vary in terms of how the payoff is determined and when the option can be exercised. These options are generally more complex than plain vanilla call and put options. Exotic options usually trade in the over-the-counter (OTC) market. In some cases, lower premiums than regular options.

What is vanilla strategy?

What Is a Vanilla Strategy? A vanilla strategy refers broadly to one that is simple and straightforward, with little complexity. Although the approach is relatively basic, many investors succeed by sticking with a simple, proven strategy such as passive investing through broad exchange-traded funds.

What are vanilla futures?

Futures contract where the quote currency (i.e. the currency in which the price of the underlying asset is denominated) is the same as base currency (i.e. the currency in which the PnL of a Futures position is computed) is known as a vanilla Futures contract.

How do swaptions work?

How does a Swaption work? With a Swaption you can fix an interest rate on your future borrowings. This is via an option on a Interest Rate Swap. By acquiring the Swaption you have obtained comfort that if rates rise beyond the agreed level prior to rollover or draw down date you are insulated from these increases.

What is a plain vanilla interest rate swap are swaps a significant source of capital for multinational firms?

Are swaps a significant source of capital for multinational firms? The plain vanilla interest rate swap is not a source of capital; it only alters the interest rate price on repayment of a theoretical—notional—debt principal.

Is binary option path dependent?

One-touch double barrier binary options are path-dependent options in which the existence and payment of the options depend on the movement of the underlying price through their option life.

What is vanilla and exotic derivatives?

An exotic derivative, in finance, is a derivative which is more complex than commonly traded “vanilla” products. This complexity usually relates to determination of payoff; see option style. For example, a knockout call can be “manufactured” out of standard options; see Barrier option#Valuation.

What are vanilla securities?

Corporate Finance. Plain vanilla is a term in finance used for securities without special features. The Plain vanilla concept may apply to Options, Futures, Swaps, and Bonds. It depicts the simplest of the forms for financial instruments and securities.


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