Asian Strangle and Exotic Options Derivatives

An Asian option is also known as the “average value option” and is a unique form of option contract where the payoff is determined by averaging the price over some pre-determined amount of time. Normally, the “European” or “American” option involves a payoff based solely on the the price at the time of exercise. There is a particular type of Asian option strategy called the “Asian Strangle”. The Asian Strangle is a particular trading strategy where, regardless of the direction of price adjustments in the underlying security, the holder of the option derivative can profit on movement alone.