Risk-Management Efficiency with Regard to Asian Options on the American Stock Market

This paper concentrates on the subject of hedging risks, and, specifically, on the topic of Vanilla and Asian options as hedging instruments. The research is based on applying the theoretical basis for comparison of Vanilla options and Asian options hedging strategies. The study is relevant to the subject of research, as it analyzes principles and mechanism of hedging. The novelty of the study consists in the author’s attempt to compare hedging with regard to Asian options and Vanilla options and approaches to pricing these options. The thesis of this paper can be stated as follows: hedging with regard to Asian options is considered to be more efficient than hedging with regard to Vanilla options.Correspondingly, the purpose of this work is to prove the thesis, and it will be achieved through completing following tasks:•To consider option pricing theories of Vanilla options, their application to Asian options and differences between them;•To Analyze the basics of hedging of Vanilla and Asian options and mechanism of their application;The research’s findings are expected to prove the advantages of Asian options over Vanilla options.