% Generated by roxygen2: do not edit by hand
% Please edit documentation in R/04_option_pricing.R
\name{price_weather_option}
\alias{price_weather_option}
\title{Price HDD and CDD Weather Derivatives}
\usage{
price_weather_option(
  temp_paths,
  strike,
  type = c("HDD", "CDD"),
  r = 0.04,
  base_temp = 18
)
}
\arguments{
\item{temp_paths}{Matrix of simulated temperature paths from simulate_weather_paths.}

\item{strike}{Strike index level K.}

\item{type}{Option contract type: "HDD" or "CDD".}

\item{r}{Risk-free discount rate (default 0.04).}

\item{base_temp}{Threshold index baseline (default 18.0 deg C).}
}
\value{
A list containing estimated price, standard error, and index distribution metrics.
}
\description{
Evaluates fair values and Monte Carlo standard errors for HDD and CDD Call Options.
}
\examples{
paths <- simulate_weather_paths(n_paths = 100, days = 90)
hdd_opt <- price_weather_option(paths, strike = 500, type = "HDD")
print(hdd_opt$price)
}
