Floating-Strike Lookback

A floating-strike lookback option provides the holder with the best possible payoff relative to the market performance without a fixed strike price. The strike is effectively set to the minimum price reached (for a call) or the maximum price reached (for a put) during the contract life.

This means the holder is guaranteed to capture the full gain from the lowest or highest point, effectively eliminating the risk of timing the market. In crypto, this is the gold standard for trend following, as it ensures the holder participates in the full range of a bull or bear move.

However, the cost of these options is prohibitively expensive due to the massive payout potential. They are primarily used as theoretical benchmarks for other derivatives or in extremely specialized institutional hedging scenarios.

The pricing is highly complex and depends on the volatility and the time remaining to maturity. It is a pure play on the range of the asset's movement.