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What do we call a Plain Vanilla option?

ForexZig.com February 22, 2013
Plain Vanilla option

Plain Vanilla option

Definition Plain Vanilla

This is the most basic or standard version of a financial instrument, generally options, bonds, futures and swaps. Plain vanilla is the opposite of an exotic instrument, which alters the components of a traditional financial instrument, resulting in a more complex security.

Example

This option is the standard type of option, one with a simple expiration date and strike price and no additional features. With an exotic option, such as a knock-in option, an additional contingency is added so as to the option becomes active only once the underlying stock hits a set price point.

 

Reading Source: Investopedia

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