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All-or nothing Option
An option with a predetermined payoff if the underlying instrument is at or beyond the strike price on expiration. Payoff takes place only when the option is at or beyond the strike price and not below the strike price.
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American options
American options are options that can be exercised any time up to the expiration date. Most exchange-traded options are American.
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Arbitrage
The simultaneous purchase and sale of a commodity or financial instrument in different markets to take advantage of a difference in price or exchange rate.
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At-the-money option
An at-the-money (ATM) option is an option that would lead to zero cash flow if it were to be exercised immediately. An Index option is at-the-money when the current index level (spot price) equals the strike price (i.e. spot price = strike price).
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Average Options
A path dependant option that calculates the average of the path traversed by the asset. It can be arithmetic or weighted average. The payoff therefore is the difference between the average price of the underlying asset over life of the option and exercise price of the option.
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