Consider a Floating-Strike Lookback Put Option Written on a Stock $S ^ { \mathrm { max } }$

question 24

Multiple Choice

Consider a floating-strike lookback put option written on a stock.Let $S ^ { \mathrm { max } }$ and $S ^ { \mathrm { min } }$ denote the maximum and minimum prices of the stock over the option's life.Then,the payoff to the option holder is given by $\max \{ X - Y , 0 \}$ ,where

• A) \(X = S ^ { \max }\)
• And
• \(Y = K\)
• ,the given strike price of the option.
• B) \(X = K\)
• And
• \(Y = S ^ { \text {min } }\)
• )
• C) \(X = S ^ { \max }\)
• And
• \(Y = S _ { T }\)
• ,the price of the underlying at maturity.
• D) \(X = S _ { T }\)
• And
• \(Y = S ^ { \text {min } }\)
• )

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