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AC-DC Option

What is 'AC-DC Option'

A derivative that gives an investor the right - but not the obligation - to buy (call) or sell (put) a security at a certain price (strike), and in which the investor makes the buy or sell decision at a specific time after the option is in force, rather than at the time of purchase. The AC-DC option is basically an option, which on a future date can become a call or put option at the buyer's discretion.


Also called a "chooser option" or "hermaphrodite option".

Explaining 'AC-DC Option'

The value of an AC-DC option is based on a complex formula that takes all of these variables into account. An AC-DC option is a type of exotic option, meaning it has more complicated terms than traditional, plain-vanilla options.


Further Reading


An overview of the AC-DC and DC-DC converters for LED lighting applications
www.tandfonline.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Popular culture as a different type of heritage: The making of AC/DC LanePopular culture as a different type of heritage: The making of AC/DC Lane
www.tandfonline.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Optimal operation of hybrid AC/DC microgrids under uncertainty of renewable energy resources: A comprehensive reviewOptimal operation of hybrid AC/DC microgrids under uncertainty of renewable energy resources: A comprehensive review
www.sciencedirect.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Assessment of technical and financial benefits of AC and DC microgrids based on solar photovoltaicAssessment of technical and financial benefits of AC and DC microgrids based on solar photovoltaic
link.springer.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Locational marginal pricing based financial transmission rightLocational marginal pricing based financial transmission right
ieeexplore.ieee.org [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Reconfigurable dc links for restructuring existing medium voltage ac distribution gridsReconfigurable dc links for restructuring existing medium voltage ac distribution grids
www.tandfonline.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Nonlinear robust control for parallel AC/DC transmission systems: A new adaptive back-stepping approachNonlinear robust control for parallel AC/DC transmission systems: A new adaptive back-stepping approach
www.tandfonline.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

Implementation of LMP-FTR mechanism in an AC-DC systemImplementation of LMP-FTR mechanism in an AC-DC system
ieeexplore.ieee.org [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …

AC/DC generators with waveform control: innovation in submerged arc weldingAC/DC generators with waveform control: innovation in submerged arc welding
www.tandfonline.com [PDF]
… If the stock follows a diffusion process, then the maintenance of a riskless hedge leads to the familiar BlackkScholes (1973) partial differential equation ac dc i a% -=r,Cr,S---g~S2-. at as 2 d&S2 (5) … Page 12. 74 R. Geske, Valuation of compound options of the option on the stock …



Q&A About AC-DC Option


How does an AC-DC option differ from other options?

An AC-DC option differs from other options because it can be exercised on a future date rather than immediately after purchase.

What is the value of an AC-DC Option based on?

The value of an AC-DC Option is based on complex formulas that take into account all variables involved in the investment.

What are some examples of an AC-DC option?

Some examples of an AC-DC option include convertible bonds and callable bonds.

What is an AC-DC option?

An AC-DC option is a derivative that gives the investor the right to buy or sell a security at a certain price.

Why would you use this type of investment over others?

You may choose to use this type of investment over others if you want more control over your money and when you want to invest it.