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- There are two types of investment strategies namely, long position and short position in the underlying asset.
- Covered call strategy involves the underlying asset and writing a call on that asset.
- Synthetics involve the purchase of call options and writing of put options at exactly the same exercise price.
- Different spread strategies are used to exploit modurate bullish and bearish trends about the market.
- Interest rate cap and floor are termed as special types of borrowings and lending options that are used for long-term hedging.
- A number of option combinations such as straddle, strangle etc., are used by investors to suit their risk-return profile.
- Exotic options are options that are more complicated than standard European or American options.
- Various Exotic options include — Asian options, Barrier options, Bermudan options, Binary options, Compound options and so on.