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Showing results for tags 'exotic options'.
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In a cliquet option with a strike price of $1,200, if the option expires at $1,000, the trade will end out of the money. The cliquet option wil then ratchet the next strike price to automatically rest at the expiry price in the previous trade, which is $1000. If the trade then ends at $1,100, the trader gets a payout and the strike price is then reset to the trade expiry of $1,100 for the next trade.