Knock-In Option

An option with two distinct triggers that define the allowable range for the price fluctuation of the underlying asset. In order for the investor to receive a payout , one of two situations must occur; the price must reach the range limits for a knock-in or the price must avoid touching either limit for a knock-out.

A double barrier option is a combination of two dependent knock-in or knock-out options.

If one of the barriers are reached in a double knock-out option , the option is killed. If one of the barriers are reached in a double knock-in option , the option comes alive.

Barrier Options - Definition of this Option Type

Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund.

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