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
  1. How does the term 'in the money' describe the moneyness of an option?

    Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >>
  2. How are call options priced?

    Learn how aspects of an underlying security such as stock price and potential for fluctuations in that price, affect the ... Read Answer >>
  3. How do I set a strike price for an option?

    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 >>
  4. What is the difference between in the money and out of the money?

    Learn about how the difference between in the money and out of the money options is determined by the relationship between ... Read Answer >>
  5. Can an option have a negative strike price?

    The simple answer is that, at least when it comes to exchange traded options, an option can't have a negative strike price ... Read Answer >>
  6. How do I change my strike price once the trade has been placed already?

    Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>
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