What Is a Frankenbunny
A frankenbunny is a hybrid financial instrument or strategy made by combining parts of different products, often to mimic a payoff or hedge risk. The term suggests a patched-together structure that is not a standard, simple security.
How Frankenbunny Structures Work
Traders build frankenbunny setups by mixing options, futures, swaps, or loans to target specific exposures. The goal is usually to replicate a payoff, reduce cost, or access a market that is otherwise hard to reach.
Risks and Practical Use
Because frankenbunny structures are complex, they can carry hidden risks, such as liquidity gaps, margin calls, or misaligned incentives. Investors should review the terms carefully and consider professional advice before using them.
For more on structured finance and hybrid instruments, see the overview at Investopedia.
