Investor Glossary-vanilla optionInvestor Glossary-vanilla optionInvestor Glossary-vanilla optionInvestor Glossary-vanilla optionInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Vanilla Option

The HTML to link to this page
 

A vanilla option is a basic option with no special attributes or features. A vanilla option can be either a call or a put. A call is a vanilla option that gives an investor the right but not the obligation to purchase a security at a pre-determined price (i.e. strike price) within a pre-specified time period. A put is a vanilla option that gives an investor the right but not the obligation to sell a security at a pre-determined price within a pre-specified time period. A vanilla option that can be exercised at anytime on or before the expiration date is called an American option. A vanilla option that can only be exercised on the expiration date is called a European option. Sometimes a vanilla option is combined with another vanilla option to create a complex strategy like a horizontal or vertical spread. Vanilla options are standardized and tend to trade on options exchanges. In contrast, exotic options are customized and trade on the OTC (i.e. over the counter) market. A vanilla option is also referred to as a plain vanilla option.



Rate this Vanilla Option definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: average price per share, quality assurance, 144a, VIX, limit order, inflation, labor relations, reverse mortgage, in escrow, diluted share, ex-dividend, wholly-owned subsidiary, APR, deferred tax, FTSE, 1031 exchange, ex-dividend date, per diem, open position, debt service coverage, retained earnings, margin rate, Zero Cost Collar, balance sheet, liquidity ratio, implied volatility, required rate of return, irrevocable trust, 401a, dividends payable, option premium, stock split, real GDP, Key Rate Duration, phantom income, FICO score, annual return, stock market close, 1035 exchange, cancelled check, command economy, EBITDA, deferred revenue, covered put, class C shares, current ratio, LIBOR, risk management, minority interest


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use