Correct answer: C

• A shout option is a path-dependent option that lets the holder lock in a value by "shouting" once during the life of the option.
• A is false: shouting arbitrarily is not always optimal; the holder should shout when it is beneficial.
• B is false: shout options can be written on both calls and puts.
• C is true: both floating-strike lookbacks and shout options have payoffs that are non-negative, so they do not expire underwater.
• D is false: the Black-Scholes formula is not well-suited for shout options because of their path dependence.