If we denote by S the FOR/DOM Trade level (i.e., one device of foreign currency is well worth S units of domestic forex) we could observe that paying out out 1 unit of the domestic currency In case the location at maturity is previously mentioned or beneath the strike is precisely similar to a funds-or almost nothing call and place respectively.
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This pays out one device of cash If your spot is below the strike at maturity. Its worth now could be supplied by
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In case of a digital put (this can be a put FOR/get in touch with DOM) spending out just one device in the domestic currency we get as existing price,
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