Fixed-Strike Lookback

A fixed-strike lookback option allows the holder to exercise the option based on the best price achieved by the underlying asset during the contract term, compared against a pre-set strike price. For a call, the payoff is the maximum of zero or the maximum price reached minus the strike.

For a put, it is the maximum of zero or the strike minus the minimum price reached. This provides the ultimate form of protection against missing the market peak or trough.

In the crypto world, where price swings can be massive and sudden, these options are the most effective way to capture the full move of a trend. Because the potential payout is maximized, the premium is extremely high, reflecting the significant risk taken by the option writer.

These are rarely traded by retail investors and are usually reserved for high-net-worth individuals or institutions looking for extreme hedging. They require sophisticated modeling to estimate the probability of the asset hitting new highs or lows.