Risk glossary

 

Compound option

An option allowing its holder to buy or sell another option for a fixed price. For example, the purchase of a European-style ‘call on a put’ means that the compound option buyer obtains the right to buy on a specified day (when the overlying option expires) a put option (the underlying option) at the overlying option’s strike price.

  • LinkedIn  
  • Save this article
  • Print this page