Cash-Or-Nothing Put

Posted in Finance, Accounting and Economics Terms, Total Reads: 349
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Definition: Cash-Or-Nothing Put

Cash or Nothing put option is an option whose payment is specified at fix price (generally, it is same as strike price) when the value of asset goes below strike price. A strike price is price at which derivative is excersised. If the price does not fall below strike price, the payoff becomes zero.


It is a binary or digital option. Binary options has two types : Cash or nothing option and asset or nothing option. These can be virtually done on any financial product with either buying a “call” or “put” option.

 

For example, if XYZ company’s stock price stuck at Rs 150 and if the price moves above Rs 150, no money is received. These are difficult to hedge and much less liquid than vanilla options

 

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