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Derivatives

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  • February 18, 2021
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MAB Option

An abbreviation for moving average barrier option; a barrier option which has a regular European option payoff, but is triggered when the moving average underlying price breaches/ hits a prespecified barrier level. The moving average price (MAP) has the potential to alleviate the impact of short-term price fluctuations and provides investors with protection against price manipulations. It is typically calculated based on the current price as well as the prices in the nearest periods over a fixed length.

The moving average price (MAP) can be used as underlying in American-style MAB options , lookback MAB options, and resettable MAB options.


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