Double digital option

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A double digital option is a particular variety of option (a financial derivative). At maturity, the payoff is 1 if the spot price of the underlying asset is between two numbers, the lower and upper strikes of the option; otherwise, it is 0.

A double digital option is similar to the exotic option with a few exceptions. for instance a double digital option has two strike prices that is the expected price during the trade season. The option has two types of strikes namely the lower and the upper strikes.^[1]

A double digital with lower strike K₁ and upper strike K₂ can be replicated by going long a digital option with strike K₁ and short another digital option with strike K₂.^[2]

1. ^ "Exotic And Double Digital Options". BOB. May 18, 2013. Retrieved 11 July 2013.
2. ^ Park, Bearbear. "An Introduction to Quantitative Finance". {{cite journal}}: Cite journal requires |journal= (help)

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