Asian option(redirected from Average Rate Option)
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An option contract in which the payoff is related to the average price of the underlying instrument over a set period of time. There are two basic types of an Asian option. In an average strike option, the underlying instrument is bought or sold at its average price over the period of the contract. In an average rate option, the payoff is the difference between the average price of the underlying asset over the life of the contract and some stated strike.
An option with a payoff that depends on the average price of the underlying asset during a period of time during the life of the option.