Gas Option

Vanilla Options

Option contracts have an expiry date by which the owner has the right to buy the underlying asset (call) or sell it (put). Different categories of options can be identified depending on the expiry:

• American options
  The right to buy or sell can be exercised at any time prior to and including the expiry date.
• European options
  The right to buy (call) or sell (put) the underlying asset can be exercised only on the expiry date.

Exotic Options

These options are structured differently from American and European options in terms of the underlying formula, or of the assessments of how or when the investor receives a given payoff. Some examples of such options are:

• Asian options
  Options in which the payoff is determined by the average price of the underlying in a predetermined period of time.
• Bermudan options
  Options that can be exercised only on specified dates, usually every month, by the expiry date.
• Barrier options
  Options that can be exercised by the holder only if the underlying reaches (or does not reach, depending on the terms of the contract) a certain price level (barrier) during the life of the option.
• Binary options
  Options that pay an agreed amount if the underlying meets a pre-defined condition upon expiry. If this is not the case, it expires without any value.