Lookback Option

This Issue in United States

Concept of Lookback Option in Futures Trading

In this context of financial law, the following is a definition of Lookback Option: An exotic option whose payoff depends on the minimum or maximum price of the underlying asset during some portion of the life of the option. Lookback options allow the buyer to pay or receive the most favorable underlying price during the lookback period.

Lookback Option

Concept of Lookback Option in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): An option (i.e. the right to buy or sell a financial instrument at some agreed conditions) where the holder has the right to buy/sell the underlying instrument at its lowest/highest price over a specified preceding period.

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See Also

• Derivatives Contract