An American call with a longer maturity is at least as valuable as a corresponding call with shorter maturity. For European options must then be differentiated if and when a dividend is paid. Here, volatility effects and interest rate effects are observed:
A European call with a longer maturity is worth more than a call with a shorter runtime when the dividend date is outside the interval between two time points. If the dividend date, however, lies between the two exercise dates, no definitive statement can be made. The amount of dividend determines the dominating effect based on the Market Scanner.
In the case of puts, it is even possible that the longer-term put is worth less than the short-term. This depends on the current price of the stock. On the other hand, if the current stock price is much lower than the strike price, the put is in the money. In extreme cases, the stock price is zero. If the put is exercised at an earlier time, it must not be so heavily discounted. The revenue is not gradable as shown by the Market Scanner.
Features
The distinguishing feature of this type of option is that the exercise price (strike price) is unknown at the time of the contract. Indicated only to determine the price of the values of spot prices over a certain period, including future values featured by the Market Scanner.
Strike price is equal to the maximum value of the spot price for the duration of the option. Strike price is determined as the average of the spot price at the indicated times. In this case, the specified date is involved in the formation of the mean value and the method of calculating the average value.
An option whose strike price is specified at the time of conclusion of the contract. There are also Asian options wherein the average value is calculated as the geometric mean. With continuous monitoring of its calculated by the formula.
Asian options are investment instruments with a moderate level of risk. Since the price of the option is based on data on the price of the underlying asset at a certain period, the investor has the ability to make a rational judgment about the appropriateness of investment and Market Scanner.
Another advantage of the Asian option is that it is usually cheaper than American or European options, since the use of the average value of the underlying asset decreases the volatility of the derivative.
There are European put and call options considered with the same underlying, strike price and maturity. Substituting calls and puts to hedge a stock in one position (short call, long put, equity long) can be derived in the case of European options, the put -call parity. This is based on the law of one price. This relationship was described by Hans Stoll (1969, Journal of Finance ) for the first time.
