This is a kind of derivative that gives investors the opportunity to call (buy) or put (sell) a certain security at a given strike (price, without any obligation to execute it, and the investors can make the decision to buy or sell the security at a specified time after the option is already in motion, instead of the time of the actual purchase. An AC-DC option is a type of option that in the future can become a put or call option depending on the buyer’s discretion.

Sometimes, it is also called as a hermaphrodite or chooser option.