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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use