AC-DC Option



A derivative that gives an investor the right - but not the obligation - to buy (call) or sell (put) a security at a certain price (strike), and in which the investor makes the buy or sell decision at a specific time after the option is in force, rather than at the time of purchase. The AC-DC option is basically an option, which on a future date can become a call or put option at the buyer's discretion.

Also called a "chooser option" or "hermaphrodite option".


The value of an AC-DC option is based on a complex formula that takes all of these variables into account. An AC-DC option is a type of exotic option, meaning it has more complicated terms than traditional, plain-vanilla options.

  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Option

    A financial derivative that represents a contract sold by one ...
  3. Call

    1. The period of time between the opening and closing of some ...
  4. Chooser Option

    An option contract that allows the holder to decide whether it ...
  5. Put

    An option contract giving the owner the right, but not the obligation, ...
  6. Swap

    A derivative contract through which two parties exchange financial ...
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