define equity exotics?

Answer 1

I'm not aware of an "equity" exotic, but there are new derivatives coming online every day.

As a way of explaanation though, an exotic "option" is a type of option that differs from common options in terms of the underlying asset or the calculation of how or when the investor receives a certain payoff. These options are more complex than options that trade on an exchange, and generally trade over the counter.

For example, one type of exotic option is known as a chooser option. This instrument allows an investor to choose whether the options is a put or call at a certain point during the option's life. Because this type of option can change over the holding period, it is apparent that this type of option would not be found on a regular exchange, which is why it is classified as an exotic option.

Other types of exotic options include: barrier options, Asian options, digital options and compound options, among others.

Equity is a term whose meaning depends very much on the context. In general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity since he or she can readily sell the items for cash. Stocks are equity because they represent ownership of a company, whereas bonds are classified as debt because they represent an obligation to pay and not ownership of assets.

Without the context of your question, or more specifics, I believe this is as far as we can go, but should give you some enlightenment as to the terms used.

Answer 2

As a way of explaanation though, an exotic "option" is a type of option that differs from common options in terms of the underlying asset or the calculation of how or when the investor receives a certain payoff. These options are more complex than options that trade on an exchange, and generally trade over the counter.

For example, one type of exotic option is known as a chooser option. This instrument allows an investor to choose whether the options is a put or call at a certain point during the option's life. Because this type of option can change over the holding period, it is apparent that this type of option would not be found on a regular exchange, which is why it is classified as an exotic option.

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