Exotic Options

Exotic options are a class of non-vanilla options that come with an array of payoffs and structures. They break down broadly into path-dependent options (where the option value is a function of the price of the underlying at expiry and its evolution over the life of the contract) and path-independent (where value is a function of the price of the underlying at expiry). Examples of exotics include Asian, lookback, barrier, range, digital, spread and quanto options. Exotic options are Over the Counter (OTC) products rather than Exchange-based contracts.