- An exotic equity option belonging to a class known as mountain range options. Himalayan options are based on a basket of underlying securities, as opposed to the typical listed (vanilla) option, which has one underlying security.
The payout for a Himalyan option is based on the average performance of the underlying assets over the life of the option. Periodic measurement dates are established and on each date, a payout is made based on the best-performing security in the basket. This security is then removed from the basket. This process continues until a single security is left. The option's total payout is the sum of all the periodic payments.
Himalayan options can be extremely difficult to properly value because the payout is linked to a basket of securities. The content and volatility of the basket will change over time as securities are periodically eliminated. This is why Himalayan options are only held by large institutional investors, typically as a long-term hedge.
Asian options also have payouts based on average performance over the life of an option, but just one underlying security is used.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Tipos de opciones — En finanzas, una opción es un tipo de derivado. Las opciones se pueden clasificar de varias formas. De forma muy genérica se pueden dividir en dos grupos: las vainilla que consisten en los contratos básicos de opciones call o put y las exóticas… … Wikipedia Español
India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… … Universalium
Darjeeling — This article is about the municipality in West Bengal, India. For its namesake district, see Darjeeling district. For other uses, see Darjeeling (disambiguation). Darjeeling city … Wikipedia
List of guinea pig breeds — A prize winning lilac Silkie There are many breeds of Guinea pig which have been developed since its domestication ca. 5000 BC. Breeds vary widely in appearance and purpose, ranging from show breeds with long, flowing hair to those in use as… … Wikipedia
West Bengal — Infobox Indian Jurisdiction type = state state name = West Bengal native name = West Bengal capital = Kolkata latd = 22.5697 longd = 88.3697 largest city = Kolkata (Calcutta) abbreviation = IN WB official languages = Bengali legislature type =… … Wikipedia
Mandi, Himachal Pradesh — For other uses, see Mandi (disambiguation). Mandi मंडी Choti Kashi, Varanasi Of Hills city … Wikipedia
Bhutan — Coordinates: 27°25′01″N 90°26′06″E / … Wikipedia
Manas National Park — Manas Wildlife Sanctuary IUCN Category II (National Park) Main entrance of Manas National Park … Wikipedia
Everest, Mount — Tibetan Chomolungma Nepali Sagarmatha Peak on the crest of the Himalayas, southern Asia. The highest point on Earth, with a summit at 29,035 ft (8,850 m), it lies on the border between Nepal and Tibet (China). Numerous attempts to climb Everest… … Universalium
Himachal Pradesh — Infobox Indian Jurisdiction type = state state name = Himachal Pradesh native name = Himachal Pradesh capital = Shimla latd=31.111 |longd=77.154 largest city = Shimla abbreviation = IN HP official languages = Hindi, Pahari, Punjabi legislature… … Wikipedia