Trade of the month: Digital payoffs
Digital options lead to two outcomes and are most commonly used with capital protected structured products.
Digital-style payouts are also known as binary or bet payouts or options, and are characterised by having only two possible outcomes. The most common use for a digital payout is in a capital protected product where, instead of upside coming through a standard call option, a digital return is offered. Generally, if the index or other underlying asset has increased in value over the life of the product, a known fixed bonus or payment is made. If this does not happen, only the capital is repaid.
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