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Cliquet option
       
 
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Cliquet option

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Cliquet option
Also known as a ratchet or reset Option. A path-dependent Option that allows buyers to lock-in gains on the Underlying Security during chosen intervals over the life time of the Option. The Option’s Strike Price is effectively reset on predetermined dates. Gains, if any, are locked in. So if an Underlying rises from 100 to 110 in year one, the buyer locks in 10 points and the Strike Price is reset at 110. If it falls to 97 in the next year the Strike Price is reset at that lower level, no further profits are locked in, but the accrued profit is kept.

See also Ladder option, Lookback option, Moving strike option, path dependent Option
Posted by  Privatebanking.com
 
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