• Lookback options are exotic options that allow the buyer to minimize regret.

  • Lookback options are only available over the counter (OTC) and not on any major exchanges.
  • Lookback options are expensive, and potential gains are often offset by costs.
  • The fixed strike option solves the problem of exiting the market - the best time to exit, and the floating strike option solves the problem of entering the market - the best time to enter.