An option in which the price of the underlying asset is not only significant at the time of expiration or exercise. Rather, price fluctuations of the underlying asset are also contractually included during the term of the option. – In the case of a knock-in barrier option, option rights only arise if the price of the underlying reaches a specified limit (barrier) within a certain period of time. – In the case of a knock-out barrier option, option rights are only acquired if the price of the underlying reaches the barrier within this period. – A double barrier option has an upper and a lower limit. It can occur both as a knock-in barrier option and as a knock-out barrier option. – If the barrier lies between the price of the underlying instrument at the time the option is entered into and the strike price, then it is referred to as a kick-in option or kick-out option. – As the buyer of a barrier option, the option right does not arise until the barrier is reached by the market price of the underlying (knock-in option, kick-in option), or the option right is lost completely and irretrievably (knock-out option, kick-out option). – See basis risk, knock-in option, knock-out value, option, ladder-type, sleepy warrant.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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