A forward-start option may be viewed as path-independent because
A) The features of the option when it comes to life depend on the price of the underlying at that point but not on the path taken to reach that price.
B) The payoff of the forward-start on its maturity date does not depend on any features of the price path of the underlying from the date of purchase of the option.
C) A forward start option always starts irrespective of the path taken to the forward start date.
D) Only the strike price of the option is unknown at the time of entering into the option.

Question

Quizplus · Accepted Answer

A forward-start option is considered path-independent because its features, such as the strike price, depend only on the underlying asset's price at the start date, not on the path taken to reach that price.

A Forward-Start Option May Be Viewed as Path-Independent Because