# Asian option and option pricing

I know Asian option is defined as follow $$\left(\frac{1}{T}\int_{0}^{T}S_t dt-K\right)^+$$ Is there a good idea behind this definition.

Thanks.

• – user16651 Aug 2 '16 at 20:18
• Where did you get this definition from? I doubt you'll ever see something like this in reality, since the continuous integral is going to be very difficult for two parties to agree on. It'll be discrete, based on agreeable fixings (ie close prices). – will Aug 2 '16 at 20:19
• This type of option probably may only be found in textbooks. – Gordon Aug 2 '16 at 20:37
• @noob2 you see them in Fx too. I've seen all three forms of mean in there too (arithmetic, geometric, and harmonic). Always discrete though, never continuous. – will Aug 2 '16 at 22:17
• The continuous average may be used as an approximation for daily arithmetic averages. – Gordon Aug 3 '16 at 12:46