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History of Options Trading
Speculation trading stayed within the elite preserve of professional and institutional investors and was accomplished by over-the-counter dealings by the use of minimum regulatory control. The first noteworthy event to transform the image of options trading occurred in 1971 when the Chicago Board of Trade designed the first supervised options trading platform by forming the Chicago Board Options Exchange (CBOE). The CBOE was the groundbreaking body which still functions these days as one of the biggest options trading environment in the world.
Some of the features and definitions of exotic options are given below:
— Option to purchase the underlying asset.
— Option to sell the underlying asset.
— Any option with a complex structure or payoff calculation.
— The agreement between the writer and the buyer.
— The last day an options contract can be exercised.
— The pre-determined price the underlying asset can be bought/sold for.
— The additional amount that traders are willing to pay for an option.
— The current value of the option’s underlying asset.
— Option that can be exercised any time before the expiration date.
— Option that can be exercised only on the expiration date.