Financial product – whose price is in a straight line relationship to the respective underlying, – has leverage on this underlying, and – for which a strike price (base price) fixed above the current price of the underlying is agreed. – Buyers of knock-out puts thus pay, converted to the subscription ratio, only that part of the respective underlying that is below this basis. The term of knock-out puts ends prematurely as soon as the price of the respective underlying touches or exceeds the strike price or a contractually agreed knock-out threshold (barrier) of the put below it. – See discount, barrier option, basis risk, knock-out value, option, path-dependent.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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