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Joint option
       
 
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Joint option

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Joint option
An Option on an Underlying, often a stock index, denominated in a second Currency. Unlike a guaranteed Exchange rate Option, in which Exchange rates are fixed, the purchaser of a joint call Option benefits from upside in the Currency in which the asset is originally denominated, for example, S&P 500 call Option struck in euro. In this case, at the inception, strike is specified in euro. At the maturity, S&P 500 level is observed and is multiplied by then current euro/US dollar rate. This converted value of S&P 500 is compared with the strike to determine the payout in euro.

See also Correlation, guaranteed Exchange rate Option, Quanto product
Posted by  Privatebanking.com
 
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