In finance, a chooser option is a special type of option contract. It gives the purchaser a fixed period of time to decide whether the derivative will be a European call or put option.
In more detail, a chooser option has a specified decision time, where the buyer has to make the decision described above. Finally, at the expiration time the option expires. If the buyer has chosen that it should be a call option, the payout is . For the choice of a put option, the payout is . Here is the strike price of the option and is the stock price at expiry.
Other articles related to "chooser option, option":
... For stocks without dividend the chooser option can be replicated using one call option with strike price and expiration time, and one put option with strike price and expiration time ...
Famous quotes containing the word option:
“A self-respecting nation is ready for anything, including war, except for a renunciation of its option to make war.”
—Simone Weil (19091943)