The Accumulator as a Toxic Option Strategy – Poland Case

Kamil Liberadzki


The paper is on toxic foreign exchange options problem which occurred in many emerging markets directly prior to - and just after the outbreak of the recent crisis. The article concentrates exclusively on so called accumulators. These portfolios of exotic options were nicknamed “I will kill you later” in the Southern Asia countries. However, they were offered also in Poland by local banks to their customers. Similarly to Asian countries, accumulators contributed to significant losses for the banks’ clients. The paper explains a mechanism of the contract as well as presents the explanatory case study of an authentic transaction. Because of accumulators’ complexity, banks succeeded in selling these unfair transactions thus, making profits. The correct pricing procedure reveals the unfairness of these options, as it is demonstrated in the article.


Exotic foreign exchange options; toxic options; accumulators; barrier option pricing; option strategies

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