Path-Dependent Option

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Path-dependent option

An option whose value depends on the sequence of prices of the underlying asset rather than just the final price of the asset.

Path Dependent Option

An option contract whose price is determined according to some formula involving the price of the underlying asset over time. Most options have prices that are dependent upon the value of the underlying asset at the time the option is exercised. A path dependent option, on the other hand, uses a more complex formula. For example, in some Asian options, the strike price is the average of the prices of the underlying asset over the life of the contract.

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