Editing Exotic option (section)

==Features==
A straight [[call option|call]] or [[put option]], either [[Option style|American]] or European, would be considered a non-exotic or vanilla option. There are two general types of exotic options: path-independent and path-dependent. An option is path-independent if its value depends only on the final price of the underlying instrument. Path-dependent options depend not only on the final price of the underlying instrument, but also on all the prices leading to the final price. An exotic option could have one or more of the following features:
* The payoff at maturity depends not just on the value of the underlying instrument at maturity, but also on its value at several times during the contract's life (for example an Asian option depending on some average, a [[lookback option]] depending on the maximum or minimum, a [[barrier option]] which ceases to exist if a certain level is reached or not reached by the underlying, a [[digital option]], peroni options, range options, [[spread option]]s, etc.)
* It could depend on more than one index, such as in [[basket option]]s, outperformance options, Himalaya options, or other mountain range options.
* The manner of settlement may vary depending on the [[moneyness]] of the option at expiry, such as a cash or share option.
* There could be callability and putability rights.
* It could involve foreign exchange rates in various ways, such as a [[quanto]] or composite option.

Even products traded actively in the market can have some exotic characteristics, such as [[convertible bond]]s, whose valuation can depend on the price and [[Volatility (finance)|volatility]] of the underlying [[Stock|equity]], the issuer's [[credit rating]], the level and volatility of [[interest rate]]s, and the [[correlation]]s between these factors.