Lookback option

(1) The exercise price can be variable or fixed. In the case of a floating strike lookback option, the exercise price is only set at maturity, either at the lowest price reached by the underlying over the life of the option in the case of a lookback call or buy-at-the-low option, or at the highest price in the case of a lookback put or sell-at-the-high option, and the payoff depends on the price of the underlying at maturity. However, in the case of a fixed strike lookback option, the exercise price is set at the start. The payoff depends on the highest price reached by the underlying, in the case of a lookback call, or the lowest price in the case of a lookback put, regardless of the price of the underlying at maturity. (2) The lookback option is a specific type of path-dependent option.