Definitions for "Average Rate Option"
Keywords:  hedge, traders, strike, spot, asian
An option whose settlement value is based on the difference between the strike and the average of the spot rates over the life of the option. The averaging can be agreed to be taken at any point in the life of the option and readings can be at any specified interval and frequency. Also known as Asian option.
An option formed to allow traders to hedge their daily exposures by using only one contract that covers the entire period of that exposure.
a hedging tool where a series of spot rate fixings during the life are used to calculate an average rate