Average rate or Asian options have a payoff function proportional to an average rate or price. The average price is calculated over a sampling of specified dates that need not be equally spaced in time. The average price or rate tends to be less volatile than a single underlying price and hence, an option on the underlying average price should be less expensive. This makes this type of option more attractive and less volatile in value because a single day’s price movement has a minimized effect on the overall value.