Lookback-Option

A lookback option is an exotic option where the strike price is set upon the exercise.

The base price is calculated here as the ( from the buyer of the option view) best price that the underlying has reached during the option term. In the case of a call that is the lowest price, the highest case of a put.

At maturity, the buyer of the option receives the difference between the market price of the underlying asset at the time of maturity and the now established strike price. This difference is in the worst case zero (if the optimum of the Price of the Underlying has been reached on the due date ) and is otherwise positive. The option can therefore never be " out of the money ".

With this option, the option buyer the risks low, and the chances are not very high. For this reason, the option premium is high for the lookback option.

As a variant that is offered to the buyer of the option at maturity the difference between a fixed at the beginning of the strike price and the best price that the underlying has reached during the option term, receives. This variant is referred to as "fixed -strike " while the name of the initially described variant " floated -strike " is.