A digital option whose payoff (a pre-determined amount, or the “all”) depends on the market value of the underlying reaching or exceeding for a call (dropping below, for a put) the pre-set barrier on expiration date. Otherwise, it pays nothing.
An all-or-nothing digital call option gives the holder the right to receive a predetermined amount (the “all”) if the underlying asset goes above the strike price. The put version of the option (all-or-nothing digital put option) gives the holder the right to receive a predetermined amount (the “all”) if the underlying asset goes below the strike price
This option (all-or-nothing option) provides a payoff upon expiration if it (i.e., its underlying) expires in the money.
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