Definition of a One Touch Option

A one touch option is a specific contract that pays out only if a strike price is met prior to the option's expiration. When the option is executed, no shares trade hands, and the only loser is the individual who sold the option. The purchaser of the option receives a one-time pay out if the strike price is met, and he or she nets a profit of the payout minus the price of the option. If the strike price is not met while the option is alive, it will expire and the purchaser will lose the sum he or she spent to purchase the option.

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