http://www.options-trading-education.com/7073/trading-asian-style-stock-options/ Trading Asian Style Stock Options Not much used in the USA, trading Asian style stock options, offers a unique approach to averaging risk and reward in stock options trading. An Asian style option is unique in that the payment for the buyer, should he or she choose to execute the contract, is determined by the average price of the underlying stock over an agreed upon period of time. This approach reduces the potential for profit in buying options and also, to a degree, reduces the potential for loss for the seller. This approach differs from American style stock options and European style stock options in that each of the later styles allows for payment based on the price of the underlying at the time of execution. In trading American style options this can be any time during the contract period and in trading European style options this is the price at the end of the contract period. Like both European style and American style options, the trader, if he is trading in an exchange, can usually exit the contract, with profit or loss, by simply executing the opposite trade on the underlying stock with the same expiration date. Asian options were first introduced in Tokyo in the 1980’s. A useful aspect of trading Asian style stock options is when companies reimburse their employees with stock options. Trading Asian Style Stock Options and Stock Options for Employees Asian options are also referred to as “average value options.” An advantage of trading Asian style stock options is that they are said to reduce the risk of market manipulation just before they mature as a rise in the price on the last day of the options contract will only slightly raise the value of the payoff. Because the averaging aspect of this kind of options contract tends to reduce volatility, Asian style options are commonly cheaper than American or European style options. This can also be a decided advantage for companies that need to expense employee stock options.

1. Trading Asian Style Stock Options
By www.options-trading-education.com

2. Not much used in the
USA, trading Asian style stock
options, offers a unique
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

3. approach to averaging risk and
reward in stock options
trading.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

4. An Asian style option is
unique in that the payment
for the buyer, should he or she
choose to
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

5. execute the contract, is
determined by the average
price of the underlying stock
over an agreed upon period of
time.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

6. This approach reduces the
potential for profit in buying
options and also, to a
degree, reduces the potential
for loss for the seller.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

7. This approach differs from
American style stock options
and European style stock
options in
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

8. that each of the later styles
allows for payment based on
the price of the underlying at
the time of execution.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

9. In trading American style
options this can be any time
during the contract period and
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

10. in trading European style
options this is the price at the
end of the contract period.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

11. Like both European style and
American style options, the
trader, if he is trading in an
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

12. exchange, can usually exit the
contract, with profit or
loss, by simply executing the
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

13. opposite trade on the
underlying stock with the
same expiration date.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

14. Asian options were first
introduced in Tokyo in the
1980’s.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

15. A useful aspect of trading
Asian style stock options is
when companies reimburse
their employees with stock
options.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

16. Trading Asian Style Stock
Options and Stock Options
for Employees
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

17. Asian options are also referred
to as “average value options.”
An advantage of trading Asian
style
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

18. stock options is that they are
said to reduce the risk of
market manipulation just
before they
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

19. mature as a rise in the price
on the last day of the options
contract will only slightly raise
the value of the payoff.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

20. Because the averaging aspect
of this kind of options contract
tends to reduce volatility,
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

21. Asian style options are
commonly cheaper than
American or European style
options.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

22. This can also be a decided
advantage for companies that
need to expense employee
stock options.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

23. Are There Advantages to
Trading Asian Style Stock
Options?
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

24. Because Asian style options
are less expensive the cost of
trading them is less
prohibitive.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

25. To the extent that a trader
engages in a profitable
options trade, he may be less
afraid of
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

26. staying in the trade when the
value of the contract peaks, as
a sudden fall in value will not
drastically affect the contract
price.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

27. Those trading Asian style stock
options will always be thinking
of the average value of the
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

28. underlying over the pre-
determined time period and
not of the value at any given
point during the day.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

29. Likewise, the seller of such a
contract may be less
concerned that he will need to
sell in the
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

30. case of a call or buy in the
case of put at a uniquely high
price due to a momentary
market fluctuation.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

31. As with all options trading it is
important to follow through
with both fundamental and
technical
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/

32. analysis of the underlying in
order to increase the odds of
a profitable trade.
http://www.options-trading-education.com/7073/trading-asian-style-stock-options/