Asset Or Nothing

Subtype of Payoff Type

In the call case the payoff amount simply equals the referenced variable x, provided x exceeds some fixed strike K. Otherwise it equals 0.
In the put case the payoff equals x, provided x falls below K. Otherwise it equals 0.
The name Asset Or Nothing results from the typical case where x is the price of some asset - such as stock or currency -, in which case the current definition is equivalent to having the folowing two distinct outcomes (from the point of view of the long payoff holder):
Either getting the asset or getting nothing.

The formal definition is as follows:
x is transformed into x if εx > εK and 0 if εx <= εK where ε and K are constants defined in the contract specification.
Furthermore ε can take only the values 1 or -1 and corresponds to a payoff attribute called
K may take any value and is usually referred to as "strike".