# Lookback straddle options trading

Lookback Options act as an insurance against regret as Lookback call options would allow investors to buy at the lowest price during the life of the options while Lookback put options would allow investors to sell at the highest price. The payoff is the maximum difference between the market asset's price at maturity and the floating lookback straddle options trading. From Wikipedia, the free encyclopedia. Lookback straddle options trading for the standard European optionsthe option's strike price is fixed. John decides to hold on to see if the underlying asset would rally further.

For the call option, the holder chooses to exercise at the point when the underlying asset price is at its highest level. As the name introduces it, the option's strike price is floating and determined at lookback straddle options trading. Lookback Options act as an insurance against regret as Lookback call options would allow investors to buy at the lowest price during the life of the options while Lookback put options would allow investors to sell at the highest price. Lookback straddle options trading Read Edit View history. With Lookback Options, investors would never again face the gruelling decision of timing an entry or exit!

Using the Black—Scholes model, and its notations, we can price the European lookback options with floating strike. Lookback straddle options trading decides to hold on to see if the underlying asset would drop further. In fact, the option is never out-of-the-money, which makes it more expensive than a standard option.

The option allows the lookback straddle options trading to "look back" over time to determine the payoff. John decides to hold on to see if the underlying asset would drop further. The pricing method is much more complicated than for the standard European options, and can be found in Musiela.

The payoff is the maximum difference between the market asset's price at maturity and the floating strike. By using this site, you agree to the Terms of Use and Privacy Policy. For the put option, the holder chooses to exercise at the underlying asset's lowest price.

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You were overwhelmed and decided to risk holding on for more profits. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative. John decides to hold on to see if the underlying asset would rally further. By using this site, you agree to the Terms of Use and Privacy Policy. Data is deemed accurate but lookback straddle options trading not warranted or guaranteed.