Exotic options effective way to hedge risk and counterparty exposure

Exotic options

Exotic instruments are options which have features that are more complex than commonly traded vanilla products. These products are usually traded over-the-counter (OTC) in the credit derivatives market or they are embedded in structured notes. Hedge funds and other financial institutions with complex portfolios use exotic instruments.

Rohan Douglas, founder and CEO at Quantifi, a provider of analytics and risk management solutions to the global credit markets, says the credit derivatives market r