File Name: Exotic Options – Asset or Nothing
Location: Modeling Toolkit | Exotic Options | Asset or Nothing
Brief Description: Computes an Asset or Nothing Option where as long as the asset is above water, the holder will receive the asset at maturity
Requirements: Modeling Toolkit, Real Options SLS
Modeling Toolkit Functions Used: MTAssetOrNothingCall, MTAssetOrNothingPut
An Asset or Nothing Option is exactly what it implies: At expiration, if the option is in the money, regardless of how deep it is in the money, the option holder receives the stock or asset. This means that for a call option, as long as the stock or asset price exceeds the strike at expiration, the stock is received. Conversely, for a put option, the stock is received only if the stock or asset value falls below the strike price. Figure 37.1 shows an example of computing the asset or nothing option.
Figure 37.1: Computing the asset or nothing option