An option to exercise on a bundle of long forwards. The forwards have a maturity date identical to the option’s expiration date but come with different underlying assets. At expiration, the option holder is allowed to choose one forward to base settlement on. Naturally, the forward with the better price will be in the holder’s favor.

A better-of option is the opposite of a worse-of option. Collectively, better-of options and worse-of options are referred to as alternative options.