Difference between forward start option and chooser option

Reference no: EM131240156

1. Explain the difference between a forward start option and a chooser option.

2. Describe the payoff from a portfolio consisting of a floating lookback call and a floating lookback put with the same maturity.

3. Consider a chooser option where the holder has the right to choose between a European call and a European put at any time during a 2-year period. The maturity dates and strike prices for the calls and puts are the same regardless of when the choice is made. Is it ever optimal to make the choice before the end of the 2-year period? Explain your answer.

Reference no: EM131240156

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