Compound option

Compound option
option on an option.
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Compound option values are extremely sensitive to the volatility of volatility.

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COMPOUND OPTION - An option on an option. Also known as a Split Fee Option (q.v.). A special case of an...
COMPOUNDED INTEREST - The interest which is accumulated and compounded over the life of a CAB and is fi...

Compound option
The right to buy or sell for a pre-agreed amount, at a set future date, a second option of predetermined specification. This second option is known as the underlying option or back option.

Compound option
option on an option.
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compound option
An option on an option. Examples are captions and floortions.
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ...

Compound Option
An option instrument that gives the holder the right, but not the obligation, to buy another specified option prior to a given expiry date.

Compound option
Option on an option.
Compounding
The process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period.

Compound Option - Is an option which is related to another option. A sequence on options such as a call on a subsequent call.

A type of compound option in which the investor has the right to exercise a call on the underlying asset, which is an option. An investor who owns a call on a call option has until the expiration date to exercise the compound option.

Compound Option
An option on an option which gives the owner the right to buy (or sell) an option at a set date at a set price....(Read more)
Compound Reversionary Bonus ...

of exotic options: basket options, which give the owner the right to receive two or more designated foreign currencies in exchange for a base currency, either at a prearranged rate of exchange or at the prevailing spot market rate; compound options, ...

It is important not to use the compound option from the onset because this adds your profits to your principal (your initial deposit), thereby 'locking up' your earnings.

Interest paid on previously earned interest as well as on the principal.
Compound option
Option on an option.
Compounding ...

See also: Convertible Bond, Time Value, Values, Exercise price, Covered Call