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derivatives_asian-option

Read-onlyIdempotent

Price Asian options using geometric closed-form or Turnbull-Wakeman arithmetic approximation. Input spot, strike, time, rate, volatility, and averaging type to compute option price.

Instructions

Asian option pricing: geometric closed-form or arithmetic approximation.

Use when pricing Asian (average-price) options. Provide spot, strike, time, rate, volatility, and averaging type. Returns: option price via geometric closed-form or Turnbull-Wakeman approximation.

Input Schema

TableJSON Schema
NameRequiredDescriptionDefault
KYesStrike price
SYesSpot price of the underlying asset
TYesTime to expiration in years
qNoContinuous dividend yield
rNoRisk-free interest rate (annualized)
typeNoOption typecall
sigmaYesVolatility (annualized)
averagingNoAveraging method for the Asian optiongeometric
observationsNoNumber of averaging observations
Behavior4/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already indicate readOnlyHint=true and destructiveHint=false. Description adds that it returns 'option price via geometric closed-form or Turnbull-Wakeman approximation', which is valuable behavioral detail beyond annotations.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness5/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Two sentences plus a list of required inputs. No wasted words; front-loaded with purpose and method. Highly efficient.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness4/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

The description covers the tool's purpose, methods, required inputs, and return value, which is sufficient for a pricing tool with well-documented schema. No output schema exists, but the return is clearly implied.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters3/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so parameters are fully described. The description lists key parameters (spot, strike, time, rate, volatility, averaging type) but does not add new semantics beyond what the schema already provides.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

Description clearly states 'Asian option pricing' with two specific methods (geometric closed-form or Turnbull-Wakeman approximation), distinguishing it from siblings like barrier options or standard options pricing.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines4/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Explicitly says 'Use when pricing Asian (average-price) options', providing clear context for when to invoke this tool, though it does not explicitly mention when not to use it or name alternatives.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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