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Investments glossary

Lookback Option

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Quotes of the day:

All that is gold does not glitter not all those that wander are lost.

— J. R. R. Tolkien

Also known as a hindsight option, a lookback option allows the holder the advantage of knowing history when determining when to exercise their option. This type of option reduces uncertainties associated with the timing of market entry and reduces the chances the option will expire worthlessly. Lookback options are expensive to execute, so these advantages come at a cost.


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