Business and Personal Finance Dictionary

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• LADDER OPTION
  
  An option somewhere between a Lookback (q.v.) and a European Option. A Ladder Call Option has one or more "Rungs" (price levels) above the initial spot level. The Call's payoff equals the greater of a European Call's payoff or the excess over Strike (q.v.) of the highest Rung that the underlying price reaches. For example, suppose that the Underlying Price is 100 and a Ladder Call has a Strike at 105 and Rungs at 115 and the Underlying Price reaches 120 before Expiration, then falls back to 98, the Ladder Call pays 15 = 120 - 105. If the Underlying price never gets above 109, then falls back to 98, the Ladder Call expires worthless.125. If
  
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