
Explanation:
For standard lookback option payoffs:
Using the given path:
$8.55 - 6.79 = 1.76$$39.23 - 8.55 = 30.68$$39.23 - 30.00 = 9.23$$30.00 - 6.79 = 23.21$The highest payoff is from the floating lookback put.
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Q-731.1. Consider the price of an asset that begins at $30.00 and ends, after 20 periods, lower at $8.55. Also highlighted are its maximum ($39.23) and minimum price ($6.79) during this 20-period life:
Among the following choices, which lookback option has the HIGHEST payoff if its life matches the 20-period interval shown?
A
Floating lookback call
B
Floating lookback put
C
Fixed lookback call with strike = $30.00 (matching the initial asset price)
D
Fixed lookback put with strike = $30.00 (matching the initial asset price)