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Derivatives

  Derivatives   |   Terms
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  • October 5, 2022
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Exit Option

An option which is embedded in another derivative (or generally a financial instrument) so that an investor is allowed to enter into an offsetting position at a preset date. For instance, an exit option could be used to enable a counterparty to a swap to get out of the agreement by entering into an offsetting swap. This way, the combined structure is tantamount to a swaption on the offsetting swap.


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