Rainbow option is a derivative exposed to two or more sources of uncertainty, as opposed to a simple option that is exposed to one source of uncertainty, such as the price of underlying asset.

A single option linked to two or more underlying assets. In order for the option to pay off, all the underlying assets must move in the intended direction.

The underlying securities can have different characteristics, such as expiry date and strike price, but all must move in the way the option holder has bet they will.

Here's a sports-betting analogy that demonstrates a rainbow option: suppose you're at a baseball tournament with three fields backing one another. One game is halfway through, a second is just starting and a third starts in an hour. A type of bet that's analogous to a rainbow option is one that earns you a profit if you pick all three winners, but gets you nothing if any one team you pick is a loser.

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… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

www.tandfonline.com [PDF]

… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

ieeexplore.ieee.org [PDF]

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… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

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… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

www.worldscientific.com [PDF]

… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

www.tandfonline.com [PDF]

… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

onlinelibrary.wiley.com [PDF]

… Thanks to the 2005 Mathematics of Finance class at the University of the Witwatersrand for alert … A rainbow option with n assets will require the n-variate cumulative normal function for application … of (Genz 2004), so here we apply this code to European rainbow options with three …

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No, they do not have similar characteristics; however, they must move in the way that you bet they will.

Traders who wish to reduce risk should consider using this option.

You should determine how much money you would like to invest in this type of investment and then choose which bets interest you most based on their potential payout amounts and probabilities .

If your prediction comes true , then you will make Rs 100 per lot .

Yes, it is possible to win with a rainbow option if some but not all picks win.

To reduce risk .

A single option linked to two or more underlying assets.

Trades are placed on exchanges like NSE or BSE .

Rainbow options may appeal most to investors who enjoy betting on sports games because it allows them to place multiple bets at once .

No, you cannot make money with a rainbow option if only one pick wins and none lose.

A rainbow spread is when you buy one call and sell two calls at different strike prices but same expiry date .

Rainbow Option is a type of option.

You need to open an account with a broker and deposit money into it before trading in these options.

Anyone can use these options.

The article focuses on how to use this type of option.

The term "underlying asset" refers to an asset that is being used as collateral for an investment.

There can be two or more underlying assets.

Yes, they must be different from each other.

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