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Derivatives




Worst-of-Two Option


An exotic option (specifically a type of an either-or option or an alternative option) whose payoff is based on the lowest individual performance fared by either of two different underlyings such as stocks or indexes. For example, a worst-of-two option could provide a payoff dependent on either the payoff of a call option on a given stock or the payoff of a put option on another stock.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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