In European options, a call option in which the payoff is some fixed amount of money if the market value of the underlying asset is above the strike price, but no payoff if it is below the strike price. In American options, the payoff occurs if the underlying's value ever "touches" the strike price, and is nothing if it never does by the expiry date of the contract. Because they are considered exotic or obscure, cash-or-nothing calls have historically been fairly illiquid investments. The SEC did not allow these options to be listed on exchanges until 2008; because of this, they formerly traded exclusively over-the-counter. Analysts use the prices of cash-or-nothing options to determine the market's best guess as to the likelihood of an event occurring.
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