.. _sphx_glr_api_gallery_exotic_options_binaries:

Binary options
--------------

All-or-nothing payoffs, the building blocks into which Reiner and
Rubinstein decomposed vanilla and barrier options.


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    <div class="sphx-glr-thumbcontainer" tooltip="Mark Rubinstein and Eric Reiner&#x27;s &quot;Unscrambling the Binary Code&quot; (1991) priced the all-or-nothing payoffs and showed that every vanilla and barrier option is assembled from them. A cash-or-nothing call pays 1 if S_T &gt; K and is worth e^{-rT}N(d_2); an asset-or-nothing call pays the share and is worth Se^{-qT}N(d_1). A vanilla call is one asset-or-nothing call minus K cash-or-nothing calls. A gap option uses different trigger and payoff strikes and can be worth less than nothing, and a one-touch pays as soon as a barrier is hit.">

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  .. image:: /api/gallery/exotic_options/binaries/images/thumb/sphx_glr_plot_01_digital_options_thumb.png
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  :doc:`/api/gallery/exotic_options/binaries/plot_01_digital_options`

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   /api/gallery/exotic_options/binaries/plot_01_digital_options