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Trends & Analysis
News

US dollar gains ahead of central bank meetings

News

Gold surges after US-Iran peace deal

News

Dow jumps 900+ points on Iran deal prospects

News

Oracle shares tank despite Q4 earnings beat

News

US dollar edges higher on Middle East concerns

News

Gold edges higher as Iran, Israel halt attacks

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Vanilla option definition

Vanilla options are simply options with no special or unusual features. They may be either calls or puts, but not a combination of the two; more complex options strategies can be built out of vanilla options. Vanilla options give the holder the right, but not the obligation, to buy an asset at a predetermined price on a set date. They can be used in various financial markets, such as the stock, forex, and commodity markets.

 

Types of vanilla options

Different types of option exist and are used in different markets. By far the most common are European options, which have a single expiry date. Much less common are American options, where they can be exercised at any time, and Asian options, which offer a ladder of specific dates up to a final expiry date where the option can be exercised. Normally when traders refer to options and option pricing they are talking about European options.

 

An option is vanilla if it has no additional characteristics and is just a lone call or put option. Exotic options can be formed either with specialised contracts, or by layering multiple call and put options to create a unique pay-out profile. These are known as exotic options, and even if they are made out of multiple vanilla options, do not qualify as vanilla.

 

Start trading with ADSS

ADSS offers a range of global markets for traders, with opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

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