Derivatives Valuation
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Derivatives Valuation | Options Types
Request API DemoVanilla Options
A vanilla option is a financial instrument that gives the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a predetermined price within a specific time period.
Call Options
Right to buy the underlying asset
Profit when price rises above strike
Limited downside risk
Put Options
Right to sell the underlying asset
Profit when price falls below strike
Protection against downside
European Barrier Options
Barrier options are exotic options that are activated or deactivated when the underlying asset reaches a specific price level (Barrier).
Knock-In Options
Option becomes active when barrier is hit:
Up-and-in: Barrier above initial price
Down-and-in: Barrier below initial price
Knock-Out Options
Option becomes worthless when barrier is hit:
Up-and-out: Barrier above initial price
Down-and-out: Barrier below initial price
Key Characteristics
European exercise style (only at expiration)
Generally cheaper than vanilla options
Digital Options
A digital call option (also known as a binary call option) is an exotic option that pays a fixed amount if the underlying asset price is above the barrier price at expiration, and nothing if it's below.
A digital put option (also known as a binary put option) is an exotic option that pays a fixed amount if the underlying asset price is below the barrier price at expiration, and nothing if it's above.
Key Features
Fixed payoff amount
Binary outcome (all or nothing)
European exercise style