PAT - The Payoff Advantage Tool
Cash Or Nothing Call

Asset 1: Cash or Nothing Call option.

Formula: H2 = V * heavy (S13 - X)

X = 1.1; V = 1

Asset 2: Asset or Nothing Put option

We saw that Cash or Nothing Put option's financially equivalent payoff had the shape of an Asset or Nothing Call option, and that an Asset or Nothing Call option's financially equivalent payoff had the shape of a Cash or Nothing Put option. We also saw that an Asset or Nothing Put option's financially equivalent payoff had the shape of a Cash or Nothing Call option; so it is logical to expect a Cash or Nothing Call option's financially equivalent counterpart to have the shape of an Asset or Nothing Put option.

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