At maturity in an asset-or-nothing option written on a stock,
A) The holder has a choice of receiving the asset or nothing in exchange for paying the strike price.
B) The holder receives the stock in exchange for the strike price if the option should finish in-the-money, and nothing otherwise.
C) The holder receives the stock without paying anything in exchange if the option should finish in-the-money, and nothing otherwise.
D) The holder receives the stock in exchange for a pre-specified consideration (which could differ from the strike price) if the option should finish in-the-money, and nothing otherwise.

Question

Quizplus · Accepted Answer

In an asset-or-nothing option, if the option finishes in-the-money, the holder receives the underlying asset (in this case, the stock) without any additional payment. If the option is out-of-the-money, the holder receives nothing. This distinguishes it from a cash-or-nothing option, where the payout is a fixed amount of cash rather than the asset itself.

At Maturity in an Asset-Or-Nothing Option Written on a Stock