An option payoff that is equal to the asset's price if the asset is below the strike price, otherwise the payoff is zero.
Investopedia Says:
These types of options don't function like regular (plain vanilla) options that pay the difference between the exercise (strike) price and market price at expiry.
Related Links:
An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them. Options Basics Tutorial
Learn the good, the bad and the ugly sides of this type of payout. The Controversy Over Option Compensations
Read up on the debate over whether or not to expense options. The Controversy Over Option Expensing
The mystery of options pricing can often be explained by a look at implied volatility (IV). The ABCs of Option Volatility
There's one simple hurdle in the transition from stock to futures options: learning about product specifications. Becoming Fluent in Options on Futures
Interested in learning more about these derivatives? We go over some basic terminology and the source of profits. Trading A Stock Versus Stock Options - Part One
Interested in learning more about these derivatives? We go over the factors affecting their price. Trading A Stock Versus Trading Stock Options - Part Two
Learn how analyzing these variables are crucial to knowing when to exercise early. Dividends, Interest Rates and Their Effect on Stock Options
