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Hard · Options & Greeks · Quant Trader interview question · compound-options, options, exercise, decision-making
A compound option is an option on another option. Specifically, consider a call option on a call option. The underlying asset is a stock. The first option (the compound option) gives the holder the right, but not the obligation, to buy a second call option at a specified strike price on a specified expiration date. The second call option, if purchased, gives the holder the right, but not the obligation, to buy the underlying stock at a specified strike price on a specified expiration date. How m