Chooser Option

Categories: Options,

An option that allows the buyer within a fixed period of time to determine if the derivative will be a call or put option. The buyer has to make this decision within a fixed period of time before expiration. Depending on the buyer's choice, if it is a put option then the payout is calculated with the formula- max (K - S,0) and a call option has a payout- max(S - K,0), where K is the strike price and S the stock price.