



Learn how to price options with the Monte Equafions method, and get a pricing spreadsheet for European, Asian, Barrier and Lookback equagions methods exist to price options. Binomial trees, for example, calculate the value of an asset over a series of time steps. At every step, the asset price can increase or decrease based on an up or down probability. Asian options are priced based on the average price of the underlying instrument.
Both the strike value and expiration value can be calculated from the average value over a period of time.Asian options are no more difficult to understand than their vanilla counterparts. The average price over the month would determine if a payout is due. The treatment of the free boundary is based on some properties of the solution of the BlackScholes equation. An artificial boundary condition is also used at the other end of the domain.
The finite difference method is used to solve the resulting problem. Computational excfl are given for some American call option problems. The results show that the new treatment is very efficient and gives pug accuracy than the normal finite difference method. International Journal of Computer Mathematics 89:9, 12391254. CrossRef.
Equations excel option asian put


