The Price of Hindsight

A fixed-strike lookback call pays the gap between the highest price the stock reaches and the strike. Move the levers to see what that privilege costs, how it compares with an ordinary call, and how high the stock must climb before the contract pays for itself.

Levers

Volatility

Term

Strike (stock starts at $100)

Interest rate

How often the high is recorded

Less frequent checks miss intraperiod spikes, so the contract is worth less.

Premium you were quoted ($)

Converts a quote into the volatility it implies.

Outcomes

Lookback call

Ordinary call

same strike and term

Price multiple

lookback ÷ ordinary

Breakeven high

at fair value, before financing

Odds of touching it

risk-neutral, continuous

Your quote implies

volatility at this schedule

Lookback callOrdinary callYour quote

Black–Scholes assumptions, no dividends. Continuous lookback values use the Conze–Viswanathan (1991) closed form; discrete schedules apply the Broadie–Glasserman–Kou (1999) continuity correction, accurate to within about 2% of simulation at monthly checks. "Odds of touching it" is the risk-neutral probability that the stock reaches the breakeven high at any point, not a forecast. Illustrative only.