# Digital height of an option

Could someone please help me explain the concept of Digital Height clearly in the options world? Thank you

• Hello @OptionsTradingFinancier: if you like my answer, could you pls click on the tick mark to accept it and then your question will be marked as "answered"? Thanks so much. – Jan Stuller Jun 7 '20 at 18:06

Digital option pays the amount $$\delta$$ if it ends up in the money otherwise it pays zero. Therefore, the pay-off diagram (pay-off on the y-axis, underlying price on the x-axis) looks like a straight line that starts at $$S_T = K$$ and the y-axis value of this straight line is equal to $$y=\delta$$. In other words, the "height" of the pay-off is equal to the digital option pay-off.
In the diagram below, $$\delta = C$$ and therefore the "height" of the digital option pay-off is $$C$$.