Michael is a macro hedge fund manager who wants to speculate on the EURO STOXX 50 Index. He believes the index will be uneventfully range-bound for the next three months until a key summit event, during which the European Commission either announce the successful issuance of Eurobonds to rescue the Eurozone, or such negotiations will faU apart. He's believe that, based on the binary outcome, the index will either start increasing or decreasing over the subsequent three months, such that in six months the index will be either dramatically higher or lower than its current level. He suggests to his team that they go long six-month straddles on the index. His colleague says, "but we can express the same view, but for less cost, with an exotic option." To what strategy does his colleague refer?
　　A. Long chooser options.
　　B. Long knock-in plus long knock-out options.
　　C. Long fixed lookback call option.
　　D. None, the equivalent exotic strategy will indeed express the view but should not be cheaper than the straddle.
　　Answer:A
　　The chooser (exotic) is similar to the straddle (a combination of call and put) in that both are long volatility; however， a long European option with a choice date in three months and an expiration in six months will be cheaper.
　　In regard to (B)， long knock-in plus long knock-out options = long European option.