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+590 Part V: Index Options and Futures 
+The discussion in this chapter concentrates on the structured products that are 
+listed and traded on the major stock exchanges. A broader array of products -
+typically called exotic options - is traded over-the-counter. These can be very com­
+plicated, especially with respect to currency and bond options. It is not our intent to 
+discuss exotic options, although the approaches to valuing the structured products 
+that are presented in this chapter can easily be applied to the overall valuation of 
+many types of exotic products. Also, the comments at the end of the chapter regard­
+ing where to find information about these products may prove useful for those seek­
+ing further information about either listed structured products or exotic options. 
+Part I: "Riskless" Ownership 
+of a Stock or Index 
+THE "STRUCTURE" OF A STRUCTURED PRODUCT 
+At many of the major institutional banks and brokerages, people are employed who 
+design structured products. They are often called financial engineers because they 
+take existing financial products and build something new with them. The result is 
+packaged as a fund of sorts (or a unit trust, perhaps), and shares are sold to the pub­
+lic. Not only that, but the shares are then listed on the American or New York Stock 
+Exchanges and can be traded just like any other stock. These attributes make the 
+structured product a very desirable investment. An example will show how a generic 
+index structured product might look. 
+Example: Let's look at the structured index product to see how it might be designed 
+and then how it might be sold to the public. Suppose that the designers believe there 
+is demand for an index product that has these characteristics: 
+1. This "index product" will be issued at a low price - say, $10 per share. 
+2. The product will have a maturity date - say, seven years hence. 
+3. The owner of these shares can redeem them at their maturity date for the 
+greater of either a) $10 per share orb) the percentage appreciation of the 
+S&P 500 index over that seven-year time period. That is, if the S&P doubles 
+over the seven years, then the shares can be redeemed for double their issue 
+price, or $20. 
+Thus, this product has no price risk! The holder gets his $10 back in the worst 
+case (except for credit risk, which will be addressed in a minute). 
+Moreover, these shares will trade in the open market during the seven years, so 
+that if the holder wants to exit at any time, he can do so. Perhaps the S&P has rallied