# Hindsight overhedge for pricing path dependent options

I understand how to use the longstaff schwartz method in Monte Carlo to compute the continuation value of path dependent options but someone recently mentioned another technique called "Hindsight overhedge". I can't find any reference to it. Has anyone come across Hindsight overhedge in Monte Carlo simulation and can point reference to it?

I believe this may be referring to a procedure whereby one uses the ‘future’ Monte Carlo paths to determine optimal exercise. For example, consider an exercise decision at $$T_1$$ within a path dependent option that expires at $$T_2>T_1$$. Then to determine whether to exercise at $$T_1$$, examine each path in [$$T_1,T_2$$] to decide if continuation value > exercise value, and exercise ‘retrospectively’ accordingly. This presumably gives an upper bound on the value, since you are cheating by looking into the future.