Explanation:
An option that provides a payoff which is determined by the underlying price periodically resetting at certain intervals is a cliquet option (also known as a ratchet option). A cliquet is constructed as a series of consecutive forward start options. In this question, the trader first buys an option, then a forward start option expiring subsequently. This chain or series is called a cliquet option.
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Q.67 A trader is interested in a strategy in which she purchases an option with the strike price of USD 92 that expires in April. She then invests in another option that starts in April and expires in July. This option will have a strike price equal to the price of the underlying in April. The series of such options is called a:
A
Cliquet option
B
Gap option
C
Forward start option
D
Spiral futures option
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