Digital Option

What Does Digital Option Mean?
An option whose payout is fixed after the underlying stock exceeds the predetermined threshold or strike price.

Also referred to as "binary" or "all-or-nothing option."

Investopedia explains Digital Option
The value of the payout is determined at the onset of the contract and doesn't depend on the magnitude by which the price of the underlying moves. So, whether you are in the money by $1 or $5, the amount that you receive will be the same.

Filed Under: Derivatives, Options

Related Terms

Call
Currency Binary
Economic Derivative
Exotic Option
In-The-Money
Intrinsic Value
One-Touch Option
Out-Of-The-Money
Single Payment Options Trading - SPOT
Strike Price
More Related Terms

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