# Knock-In

### Definition

A Knock-In is a vanilla option that becomes alive (is "knocked-in") if the underlying spot breaches a predetermined barrier before maturity.

### Barrier

For a regular Knock-In, the barrier is OTM, i.e., below the strike for a call and above the strike for a Put.  For a reverse Knock-In (or "kick-in"), the barrier is ITM, i.e., above the strike for a call and below the strike for a Put.

### Premium

The Knock-In premium is lower than that of a regular Vanilla option.  The further away the barrier from spot, the lower the premium, as there is lower probability that the option will become alive before expiry.

### Payoff

If the barrier is knocked-in, then the profile of a Knock-In option is the same as a regular Vanilla option.  If the option is not knocked-in, the customer having a position in the underlying currency does not benefit from any FX hedge.