# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Asset-or-Nothing Put Option

Written By
Paul Tracy
Updated January 16, 2021

What is an Asset-or-Nothing Put Option?

An asset-or-nothing put option is an option with two possible outcomes: a fixed amount if the market value is below the strike price and no payment at all if it is higher than the strike price.

How Does an Asset-or-Nothing Put Option Work?

A typical put option will have a market value based on the difference between the market price of the underlying asset and the strike price for that asset. An asset-or-nothing put option, or binary put option, is a put option for which there is a specified fixed payout for any price, prior to expiration, that is below the contract's strike price. There is no payment on any price that is higher than the strike price during that same timeframe.

To illustrate, suppose an asset-or-nothing put options contract on XYZ stock has a strike price of $50. The terms of the contract state that if XYZ stock dips below $50 prior to or at expiration, the holder will receive a fixed sum of $100. If the market price of XYZ stock exceeds the strike price prior to or at expiration, the holder will receive nothing.

Why Does an Asset-or-Nothing Put Option Matter?

Asset-or-nothing put options provide holders with a guaranteed amount of money regardless of how far the market price of the underlying asset falls below the strike price. Investors should understand that any price above the strike price automatically disqualifies the holder from any gains.

Ask an Expert about Asset-or-Nothing Put Option
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Asset-or-Nothing Put Option.
Be the first to ask a question

If you have a question about Asset-or-Nothing Put Option, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Asset-or-Nothing Put Option, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Asset-or-Nothing Put Option

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms