Asian Option

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DEFINITION of 'Asian Option'

An option whose payoff depends on the average price of the underlying asset over a certain period of time as opposed to at maturity. Also known as an average option.

INVESTOPEDIA EXPLAINS 'Asian Option'

This type of option contract is attractive because it tends to cost less than regular American options.

An Asian option can protect an investor from the volatility risk that comes with the market.

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