A type of multi-asset option in which the payoff is based on the better or worse performing of two underlying assets. For example, an option on the maximum of two assets could be a call on two stocks (A and B) that allows the holder to see, at expiration, which stock has the higher price, and then choose that stock to base the payoff on. This feature makes a min-max option similar to an alternative option and an outperformance option. However, determining the better or worse performing asset in an alternative option is not based on how high or low the price is, but rather on the rate of return on the asset during the option’s tenor. Likewise, in an outperformance option, the payoff is determined by the difference in the prices or rates of return on two underlying assets or indexes with respect to an exercise price or rate.

The main types of min-max option are maximum options and minimum options. However, better-of options (best-of options) or worse-of options (worst-of options) are collectively known as alternative options.

A min-max option could also refer to a collar, range forward, or equity risk reversal.