A binary option pays one fixed amount when a specified event occurs at maturity and zero otherwise.
A digital call option with strike pays one unit if and zero otherwise.
A digital put option with strike pays one unit if and zero otherwise. With these complementary boundary conventions, one digital call plus one digital put equals a zero-coupon bond paying one unit at maturity.

Ancestors (8)

  1. European contingent claim
  2. Contingent claim
  3. Fundamental theorem of asset pricing
  4. Mathematical finance
  5. Mathematical optimization
  6. Area of mathematics
  7. Mathematics
  8. Home

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