The Wiley Finance Series: Exotic Options and Hybrids

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The recent financial crisis highlighted widespread misunderstandings and misuses of exotic derivatives, revealing a critical need for clarity. This practical guide addresses the structuring, pricing, and hedging of complex exotic options and hybrid derivatives, supporting readers through the crisis, recovery, and future markets. Written by seasoned practitioners, it emphasizes the three main phases of a derivative’s life: product structuring, pricing, and hedging. The book is organized into four parts, covering a variety of structures, including the latest exotic equity derivatives and hybrid products. It presents practical, intuitive discussions based on real-world scenarios from a derivatives operation, making complex concepts accessible. Detailed examinations of actual trades and carefully selected examples illuminate significant business aspects. Payoff structures are introduced alongside scenario analyses, diagrams, and sample term sheets, helping readers identify risks for sound valuation and hedging. The text includes questions and discussions to illustrate key concepts contextually. It emphasizes the applications, strengths, and limitations of various models in relation to products and risks, avoiding overly technical language. By demystifying exotic options and hybrids in a practical setting, this guide enhances understanding and effective management of these products.