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TAPO

Source: Investopedia
This Article has been Edited for Accessibility

TAPO

What is 'TAPO'

An option in which the profit or loss to the investor is based not solely on the price of the underlying asset at expiration, but on the difference between the strike price and the average price of the underlying asset during the option's term. A TAPO, Traded Average Price Option, (traded average price option) is also known as an Asian option.

Explaining 'TAPO'

One exchange where TAPOs are commonly traded is the London Metal Exchange, a major marketplace for futures in non-ferrous metals such as aluminum, copper, lead and zinc. These call and put options come in contract lengths ranging from one to 27 calendar months and their settlement price is determined by the monthly average settlement price. TAPOs, traded options and futures are all used as hedging tools.


Additional Resources

  1. Us Reconstruction Aid For Afghanistan [watson.brown.edu]
  2. Usda Foreign Agricultural Service: Home [extension.psu.edu]
  3. Game Theor Y And Ma Thema Tica L Economics [web.stanford.edu]
  4. Georgetown Alumni [alumni.georgetown.edu]