A time-dependent option contract that consists of a series of consecutively-activated, at-the-money forward start options, each of which is struck at the money once it becomes active. The first option comes into life immediately, while the second is activated upon expiration of the first, and so on. This option has the effect of periodically locking in profits. The cliquet option pays the positive relative performance of the underlying price on a bunch of dates. Cliquets are particularly useful because they allow investors to take positions on an underlying’s future volatility at a lower cost than other option strategies.

This option comes under several other names including a reset option, a ratchet option, a lock-in option, or a ladder option.