Cliquet options are purchased because
A) A portfolio of forward start options is cheaper than buying them separately.
B) There is diversification in a portfolio of forward start options.
C) They are analogous to owning Asian forward options.
D) It is the same as buying rolling forward start options but has the advantage of locking in possibly low volatilities today.

Question

Quizplus · Accepted Answer

Cliquet options are purchased because they offer the advantage of locking in possibly low volatilities today by buying rolling forward start options. They are similar to owning Asian forward options but with additional benefits. Option A and B do not accurately describe the purpose of cliquet options.

Cliquet Options Are Purchased Because