What is the value of the binary option if the strike price, Finance Basics

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What is the value of the binary option if the strike price

Problem

The stock of NovelCo is currently trading at $50. The risk-free rate is zero; the volatility of NovelCo's stock return is 20% per annum. A bank creates a two-month option "Binary" on NovelCo's stock. If the stock price on the maturity date is above or equal to the strike price, the option holder receives $10; otherwise the option holder receives nothing. What is the value of this "Binary" option if the strike price is $53?

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Finance Basics: What is the value of the binary option if the strike price

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