barrier option

barrier option
options contracts that remain dormant until a trigger point (the barrier price) is reached, at which point the call or put option is activated, and results either in a long or short options position, or in the automatic exercise of an options position. One example is an up-and-in call. Assume an exercise price of $50 and a barrier price of $53. If the stock stays below $53, the call option cannot be exercised. If the stock price reaches the $53 barrier price, the holder then has a call option on the shares at $50. These are exotic options. Bloomberg Financial Dictionary

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   An option, which is activated or deactivated once the price of the underlying financial instrument reaches a set level, known as the barrier. It can be categorized into either trigger or knockout options.
   FIGURE 1 Bar chart
   ► See also Option.

Financial and business terms. 2012.

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Look at other dictionaries:

  • Barrier-Option — Barrier Optionen sind eine Sonderform von Optionen und zählen zu den exotischen Optionen. Der Hauptunterschied zu den Optionen besteht darin, dass Barrier Optionen durch das Eintreten bestimmter Ereignisse aktiviert oder deaktiviert werden. Man… …   Deutsch Wikipedia

  • Barrier option — In finance, a barrier option is a type of financial option where the option to exercise depends on the underlying crossing or reaching a given barrier level . Barrier options were created to provide the insurance value of an option without… …   Wikipedia

  • barrier option — See in barrier option; out barrier option …   Big dictionary of business and management

  • Barrier Option — A type of option whose payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price. A barrier option is a type of exotic option. It can be either a knock in or a knock out …   Investment dictionary

  • Rebate Barrier Option — A financial derivative product that will automatically expire if the underlying asset reaches a certain price, at which time the option holder would be refunded a certain portion of any premium paid. A barrier option is a type of exotic option… …   Investment dictionary

  • Double Barrier 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… …   Investment dictionary

  • in-barrier option — An option that is eliminated if the price of the underlying fails to pass a certain level. In such cases the premium paid for the option is partly reimbursed. Compare out barrier option …   Big dictionary of business and management

  • out-barrier option — An option that is eliminated when the value of the underlying reaches a certain level, at which point the initial premium is partly refunded. Compare in barrier option …   Big dictionary of business and management

  • Barrier Optionen — sind eine Sonderform von Optionen und zählen zu den exotischen Optionen. Der Hauptunterschied zu den Optionen besteht darin, dass Barrier Optionen durch das Eintreten bestimmter Ereignisse aktiviert oder deaktiviert werden. Man unterscheidet… …   Deutsch Wikipedia

  • Option style — In finance, the style or family of an option is a general term denoting the class into which the option falls, usually defined by the dates on which the option may be exercised. The vast majority of options are either European or American (style) …   Wikipedia

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