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Plain Vanilla
The most basic or standard version of a financial
instrument, usually options, bonds, futures and
swaps. Its opposite is an exotic instrument, which
alters the components of a traditional financial
instrument, resulting in a more complex security.
For example, a plain vanilla option is the standard
type of option, one with a simple expiration date and
strike price and no additional features. With an exotic
option, such as a knock-in option, an additional
contingency is added so that the option only becomes
active once the underlying stock hits a set price point.
The most basic or standard version of a financial
instrument, usually options, bonds, futures and
swaps. Its opposite is an exotic instrument, which
alters the components of a traditional financial
instrument, resulting in a more complex security.
For example, a plain vanilla option is the standard
type of option, one with a simple expiration date and
strike price and no additional features. With an exotic
option, such as a knock-in option, an additional
contingency is added so that the option only becomes
active once the underlying stock hits a set price point.