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Answer: Vanilla call < Shout < Lookback
**Correct answer: C** Under otherwise identical conditions, the typical price ordering for call options is: **Vanilla call < Shout call < Lookback call** - A **vanilla call** has the least flexibility. - A **shout call** gives the holder some ability to lock in a favorable level. - A **lookback call** is most valuable because it effectively lets the holder choose the most favorable underlying price over the life of the option. Therefore, the most likely relationship is **Vanilla call < Shout < Lookback**.
Author: Manit Arora
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Q-18.3 What is the most likely relationship among the prices of a call option, ceteris paribus?
A
Shout < Vanilla call < Lookback (i.e., shout less expensive than regular call is less expensive than lookback)
B
Lookback < Shout < Vanilla call
C
Vanilla call < Shout < Lookback
D
Vanilla call < Lookback < Shout
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