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In finance, a chooser option is a special type of option contract. It gives the purchaser a fixed period to decide whether the derivative will be a European call or put option.
In more detail, a chooser option has a specified decision time t 1 {\displaystyle t_{1}} , where the buyer has to make the decision described above. Finally, at the expiration time t 2 {\displaystyle t_{2}} the option expires. If the buyer has chosen that it should be a call option, the payout is max {\displaystyle \max}. For the choice of a put option, the payout is max {\displaystyle \max}. Here K {\displaystyle K} is the strike price of the option and S {\displaystyle S} is the stock price at expiry.