Why are lookback options expensive?

Lookback options guarantee the best entry (for calls) or best exit (for puts) over the option's life, making them significantly more expensive than vanilla options.

What is the difference between fixed and floating lookback options?

Floating lookback options have a strike equal to the optimal price over the period. Fixed lookback options have a predetermined strike and use the extreme price as the final value.

Lookback Option Pricing Calculator

Calculate the price of fixed and floating lookback options. Floating lookback calls pay the difference between the terminal price and the minimum price over the life of the option, offering the benefit of hindsight.

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$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate the price of fixed and floating lookback options. Floating lookback calls pay the difference between the terminal price and the minimum price over the life of the option, offering the benefit of hindsight. Use the lookback option result to inform your calculation.

Lookback Option Pricing Calculator

How to Use

Frequently Asked Questions

Why are lookback options expensive?

What is the difference between fixed and floating lookback options?