Interview Question: Exotic Options

Sample Question #234 (finance – options)
What are Asian-style options? How do you price them? Intuitively, should the premium on an Asian option be higher or lower than that on a European or American option?
This entry was posted in Sample Qs. Bookmark the permalink.

One Response to Interview Question: Exotic Options

  1. Brett says:

    A good explanation can be found here.
    Intuitively, an Asian option will have a lower premium than a regular option with otherwise the same terms. The reason is the volatility of average price (or average rate) is lower than that of the actual price (or rate).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s