Asian Option

This is an exotic option that is based on the average value of an underlying asset as opposed to the current price (spot price) at the time you buy or sell an asset. The dates of actual valuation (when prices are recorded for averaging purposes) would be laid out in your contract (hint: you should read it).

Generally, Asian options will be less expensive than standard (American or European) options because averaging the prices of an underlying asset takes out the upside of volatility. In other words, you’re missing out on the benefit of a big climb or drop in price because you’re stuck with the average of a whole bunch of prices.

Of course, this is a good thing if you want to avoid potential financial losses due to the one-stop-shop spot price. Asian options are also helpful if you’re worried about volatility, or if there’s a reason the price of an asset could drastically change.