Asset-Or-Nothing Call Option

DEFINITION of 'Asset-Or-Nothing Call Option'

A derivative security for which there is no payoff unless the underlying asset's price exceeds the strike price. With an asset-or-nothing call option, the payoff is equal to the asset's price, as long as the asset's price exceeds the strike price. If the asset's price remains below the strike price, the option expires as worthless.

BREAKING DOWN 'Asset-Or-Nothing Call Option'

The payoff structure of an asset-or-nothing call option is different from that of a regular (plain vanilla) option, which pays the difference between the exercise (strike) price and market price at expiry. The opposite of an asset-or-nothing call option is an asset-or-nothing put option, which pays a fixed amount if the asset's price remains below the strike price and pays nothing otherwise. Asset-or-nothing options are classified as binary options because there is either a fixed payoff or no payoff at all.

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RELATED FAQS
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    Learn about the strike price of an option and how to set a strike price for call and put options depending on risk tolerance ... Read Answer >>
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  5. Can an option have a negative strike price?

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