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Investopedia explains 'Exotic Option'
For example, one type of exotic option is known as a chooser option. This instrument allows an investor to choose whether the options is a put or call at a certain point during the option's life. Because this type of option can change over the holding period, it is not be found on a regular exchange, which is why it is classified as an exotic option.
Other types of exotic options include: barrier options, Asian options, digital options and compound options, among others.
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