Flexible Exchange Option - FLEX

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DEFINITION of 'Flexible Exchange Option - FLEX'

A non-standard option which can be customized, allowing both the writer and purchaser to define various terms. Flexible Exchange Options allow parties to negotiate the exercise style, strike price, expiration date and other features and benefits. They also give investors the opportunity to trade on a larger scale with expanded or eliminated position limits.

BREAKING DOWN 'Flexible Exchange Option - FLEX'

FLEX options do not trade in the continuous market. Instead, they are typically written by clearing houses. FLEX options were created in 1993 by the Chicago Board Options Exchange (CBOE) to target the over-the-counter (OTC) market of equity options and provide customers with more flexibility.

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RELATED FAQS
  1. Does the seller (the writer) of an option determine the details of the option contract?

    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Full Answer >>
  2. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  3. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
  4. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
  5. What is the difference between derivatives and options?

    Options are one category of derivatives. Other types of derivatives include futures contracts, swaps and forward contracts. ... Read Full Answer >>
  6. How are rights distributed in a rights offering?

    In a rights offering, rights are distributed to shareholders based on the number of shares they already own. What Is a Rights ... Read Full Answer >>

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