A best-of option whose payoff at maturity is equal to whichever is higher of two values: zero or the maximum return obtained from an asset belonging to a basket of assets minus the option’s strike price. This option, in effect, is a call option on a best-of, and hence it offers the holder a larger payout potential relative to a regular call on the same underlying basket of assets.
Derivatives
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Comments