For a derivative on an underlying denominated in one currency, where the derivative is denominated in a different currency, payments are exchanged using a floating foreign-exchange rate. The derivative holder thus has foreign exchange risk as well as exposure to the underlying

American Depository Receipt (ADR)

A security issued by a US bank representing non-US shares held in trust by that bank.

American-Style Option

Option which can be exercised at any time during its life up until the expiration date.

Asian Option

Also known as Average option. The option pay-out depends on some average of the value of underlying. Either or both the settlement price and the strike of the option can be averaged.


The price for which an issuer (market maker) or broker is willing to sell.

At-The-Money (ATM)

The strike price is equal to the spot price of the underlying.

Automatic Exercise

The owner of the option automatically receives the intrinsic value without having to take any express action himself on the expiration date. (This may be provided for in the contractual terms and conditions of the warrant.)