country flag
  1. Home
  2. Blog Posts

Exotic Derivatives

Contributor Image
Written By
Dan Buckley
Contributor Image
Written By
Dan Buckley
Dan Buckley is an US-based trader, consultant, and part-time writer with a background in macroeconomics and mathematical finance. He trades and writes about a variety of asset classes, including equities, fixed income, commodities, currencies, and interest rates. As a writer, his goal is to explain trading and finance concepts in levels of detail that could appeal to a range of audiences, from novice traders to those with more experienced backgrounds.
» Dan Buckley Profile Page
Updated
Dec 13, 2021
Exotic Derivatives

What are exotic derivatives?

Exotic derivatives are types of financial instruments (e.g., futures, swaps, forwards, options, and other agreements) that are made on non-traditional financial arrangements.

Exotic derivatives will typically be chosen by market participants to fit certain needs for purposes of hedging, speculation, or portfolio diversification.

What kind of exotic derivative products are there?

There is a wide range of exotic derivatives that can be traded in the market to fulfill any type of business need, so long as there’s a counterparty willing to take on the risk, such as a bank, hedge fund, or other type of investor.

These types of exotic derivatives have specific payoffs based on certain conditions that need to be reached before they mature.

In the following articles, we explore exotic derivatives in five main categories: