The pre-specified exchange rate at which the payoff of a quanto option is converted at maturity from one currency (e.g., a domestic currency) to another (a foreign currency- i.e., the quanto currency). The quanto factor is set at the beginning of the trade.

A quanto option is typically a cash-settled option, whose payoff is converted into a another currency at maturity at a pre-specified rate, i.e., (the quanto factor).