Payoff of a binary option pricing models


The options described here are path dependent, which means that the payout profile depends on the asset value during the life of the option and the value of the underlying asset when the barrier is hit or on the expiry date of the option. FINCAD offers the most transparent solutions in the industry, providing extensive documentation with every product. The first are options where a payout of cash or the asset is made if the barrier is payoff of a binary option pricing models or not hit during the life of the option.

For asset payouts, however, the distinction is more subtle. On the other hand, if the payout is made at option expiry, then the present value of the payout is equal to whatever the asset value happens to be at the expiry date, discounted back to the valuation date. Calculate the fair value, risk statistics and probability of hitting the barrier for a binary barrier payoff of a binary option pricing models with a payoff equal to the value of the asset if the barrier is not touched, or nothing if the barrier is touched. For a call, the payout is received if the underlying asset price is greater than the strike price, and for a put, the payoff of a binary option pricing models is received if the strike is greater than the underlying asset price. Calculate the fair value, risk statistics and probability of hitting the barrier for a knock-out binary barrier call or put option with a payoff of a fixed amount of cash if the barrier is not touched and the option is in the money at expiry, or nothing if the barrier is touched.

For asset payouts, however, the distinction is more subtle. The next generation of powerful valuation and risk solutions is here. The payout is made either when the barrier is hit, or at option expiry. Calculate the fair value, risk statistics and probability of hitting the barrier for a binary barrier option with a payoff equal to the asset value if the barrier payoff of a binary option pricing models touched, or nothing if the barrier is never touched. Calculate the fair value, risk statistics and probability of hitting the barrier for a knock-out binary barrier call or put option with a payoff of a fixed amount of cash if the barrier is not touched and the option is in the money at expiry, or nothing if the barrier is touched.

Calculate the fair value, risk statistics and probability of hitting the barrier for a binary barrier option with a payoff of a fixed amount of cash if the barrier is not touched, or nothing if the barrier is touched. Calculate the fair value, risk statistics and probability of hitting the barrier for a knock-in binary barrier call or put option with a payoff equal to the value of the asset if the barrier is touched and the option is in the money. Calculate the fair value, delta, and probability of hitting the barrier for a path dependent digital option where the payoff is on the expiration date. Introduction A Binary Barrier Option is a type of digital option for which an option's payout depends on whether or not the asset touched a barrier level at some time during the life of the option.

The payout is made either when the barrier is hit, or at option expiry. The payoff is, usually, a fixed amount of cash or the value of the asset. For cash payouts, this distinction will only affect the period of time over which the payment is discounted.