In general, it is the span of time during which a derivative (e.g., an option) can be exercised. For example, in a lookback option, a window period/ lookback period defines the period of time during which the holder (the long) is allowed to exercise the contract using the most favorable terms achieved during the contract’s life.

Exercisability during such a period is defined in the contract and is usually taken into consideration in pricing an option. That is, the writer would expect a higher premium for such extra features which give the holder more flexibility. However, if period-restricted exercisability would other impact the holder’s flexibility as to exercise, then the premium could be lower than that of standard options.