An option that doesn’t conform to the standard specifications and formalities of exchange-traded options. Such an option can expire on any day as agreed on by the two counterparties. Also, its strike price can virtually be any desired amount. The underlying, likewise, can be any type of assets, and not necessarily exchange-traded.

Most non-standard options trade in the OTC market, where there is very little regulation or transparency. The CBOE tried to tap into this market years ago by introducing FLEX options, allowing non-standard options to be quoted and traded on an exchange. Nevertheless, the OTC market still dominates non-standard options trading.

Examples of non-standard options include: barrier options, quanto options, basket options, crash options, rally options, rainbow options, etc.

Non-standard options are also known as exotic options.