compound option

compound option definition - business

compound option

An option to purchase an option. Examples include a call on a call option or a call on a put option. A fee must be paid to buy a compound option, and a second payment must be made to the owner of the option in the event the compound option is exercised. Also called split-fee option.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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