Filter by Categories
Accounting
Banking

Derivatives




Average Strike Option


An option whose payoff depends on the difference between the final asset price and the average strike price. More specifically, the strike of an average strike option is not determined at the contract date. Rather it is calculated as an average of the spot rate as observed on a specific series of dates (or fixings) throughout the option’s life. If on the expiration date the average of spot rates is higher than the strike, the option is in the money and it is cash-settled, i.e., without having to physically deliver or taking delivery of the underlying asset.



ABC
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*