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Asian Option is an option contract in which the payoff is related to the average price of the underlying instrument over a set period of time. There are two basic types of Asian option. In an average strike option, the underlying instrument is bought or sold at its average price over the period of the contract. In an average rate option, the payoff is the difference between the average price of the underlying asset over the life of the contract and some stated strike.

The main purpose of Asian options is the ability to express views on long-term market dynamics in a fashion relatively insensitive to daily knee-jerk reactions to news and other sources of worry. Also, Asian options help in reducing market manipulation.

**ASIAN OPTION REFERENCES
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Hull, J. (2011). Options, Futures, and Other Derivatives (8th ed). Pearson / Prentice Hall.

Lipton, A. (2001). Mathematical Methods for Foreign Exchange: A Financial Engineer's Approach. World Scientific.

Nelken, I., ed (1996). The Handbook of Exotic Options: Instruments, Analysis and Applications. McGraw-Hill.

Taleb, N. (1997). Dynamic Hedging: Managing Vanilla and Exotic Options. Wiley Finance, New York.

Kemna, A. G. Z., & Vorst, A. C. F. (1990). A Pricing Method for Options Based on Average Asset Values. Journal of Banking & Finance, Vol. 14, Issue 1, pp. 113-129.

Rogers, L. C. G., & Shi, Z. (1995). The value of an Asian option. Journal of Applied Probability, Applied Probability Trust, 32 (4), pp. 1077–1088.

Fusai, G., & Meucci, A. (2008). Pricing discretely monitored Asian options under Lévy processes. J. Bank. Finan., 32 (10), pp. 2076–2088.

Lemmens, D., Liang, L. Z., Tempere, J., & De Schepper, A. (2010). Pricing bounds for discrete arithmetic Asian options under Lévy models. Physica A: Statistical Mechanics and its Applications, 389 (22), pp. 5193–5207.

Bjork, T. (2009). Arbitrage Theory in Continuous Time (3rd ed). Oxford University Press.

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