AVERAGE PRICE PUT

A kind of option wherein the payoff is based on the difference between the average price and the strike price of the underlying asset. In case the underlying asset's average price over a particular time span exceeds the strike price of the average price put, the payoff for the option buyer is zero. Conversely, if the underlying asset's average price is underneath the strike price of such a put, the payoff for the option buyer will be positive and is the difference between the average and strike price. The average price put is taken as an exotic option because the payoff depends on the average price of the underlying asset within a particular time span, contrary to a straight put whose value depends on the price of the underlying asset within any point in time.