In present day, a “Japanese option” may seem an out-dated term, though still it can refer to an option which confers on the holder fixed periodic exercise rights. Historically, Japanese options were initiated on Japanese stock markets such as the Tokyo Stock Exchange (TSE) and used to be exercised on Thursdays within time to expiration. However, in 1992, the exercise of Japanese options started to follow the style of European options.

Nevertheless, it could be meant by a Japanese option that type of option in which the exercise price is defined as the average price of the underlying during the option’s life (also known as an Asian option).