One-Touch Option
Computes the price of a one-touch option: it pays a fixed amount if the asset touches a barrier above the current price at any time before expiry, and nothing if it never touches. It's one of the most traded American binary options in the FX market, and its price is the risk-neutral probability of the price reaching the barrier, brought to present value. Enter the spot price, the barrier, the rate, the volatility, the term and the payout.
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One-Touch Option
Computes the price of a one-touch option: it pays a fixed amount if the asset touches a barrier above the current price at any time before expiry, and nothing if it never touches. It's one of the most traded American binary options in the FX market, and its price is the risk-neutral probability of the price reaching the barrier, brought to present value. Enter the spot price, the barrier, the rate, the volatility, the term and the payout.
You win if the price touches there, once
The one-touch is the most direct bet on whether a price will reach a level. It pays a fixed amount if the asset touches a barrier above the current price at any time before expiry, and nothing if it never gets there. A single touch, in one instant, wins the bet. It's one of the most traded options in the over-the-counter FX market.
The one-touch's price is, in essence, the probability of the price reaching the barrier, computed in the risk-neutral world and brought to present value. That's the first-passage probability of a geometric Brownian motion, and it has a closed form — don't confuse it with the probability of simply finishing above the barrier, which is much lower, because the price can touch and come back.
Enter the spot price, the barrier (above spot), the interest rate, the volatility, the term and the payout. The tool returns the one-touch price. The closer the barrier and the more volatile the asset, the greater the chance of touch and the more expensive the option.
Related Tools
No-Touch Option
Computes the price of a no-touch option: it pays a fixed amount if the asset does NOT touch a barrier before expiry, and nothing if it touches. It's the opposite bet to the one-touch — you win as long as the price behaves and stays away from the barrier. The two are complementary: the sum of a one-touch and a no-touch with the same barrier is always the discounted payout. Enter the spot price, the barrier, the rate, the volatility, the term and the payout.
Cash-or-Nothing Put
Computes the price of a cash-or-nothing put: it pays a fixed amount if the asset finishes below the strike, and nothing otherwise. It's the downside version of the digital option, the complement of the cash-or-nothing call. The price is the payout discounted and multiplied by the risk-neutral probability of the asset finishing below the strike, Q·e^(−rT)·N(−d2). Enter the spot price, the strike, the interest rate, the term, the volatility and the payout.
Garman-Kohlhagen FX Call Price
Prices an FX call option with the Garman-Kohlhagen model, the extension of Black-Scholes to the currency market. The foreign interest rate behaves like a continuous dividend on the base currency: the premium is S·e^(−rf·T)·N(d1) − K·e^(−rd·T)·N(d2). The spot term is discounted by the foreign rate and the strike by the domestic rate — swapping the two flips the result. It is used for hedging and speculation with currency options. Enter the spot rate, the strike, the domestic and foreign rates, the term in years and the volatility.
The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.