A vanilla option refers to a normal option with no special features, terms , or conditions. Options come in a variety of "flavors. In comparison to other option structures, vanilla options are not fancy or complicated.

Such options may be well-known in the markets, and easy to trade. Increasingly, however, the term vanilla option is a relative measure of complexity, especially when investors are considering various options and structures.

Option structures may be complex. However, in options trading, sometimes, simple option structures may be warranted.

It is important to note that vanilla options do not necessarily indicate lower performance or opportunity. Call Option -- Option to purchase the underlying asset. Put Option -- Option to sell the underlying asset. Options Contract -- The agreement between the writer and the buyer.

Expiration Date -- The last day an options contract can be exercised. Intrinsic Value -- The current value of the option's underlying asset.

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Time Value -- The additional amount that traders are willing to pay for an option. American Option -- Option that can be exercised any time before the expiration date.

European Option -- Option that can be exercised only on the expiration date. Exotic Option -- Any option with a complex structure or payoff calculation.

More option-related definitions can be found at the InvestingAnswers Option Category Page. Our in-depth tools give millions of people across the globe highly detailed and thoroughly explained answers to their most important financial questions.

Call Option Strategies ~ Best Option Strategy

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