EAKO - User Guide
  • Guides
  • EAKO User Guide
  • Glossary
  • Strategies
  • Call Option
  • Put Option
  • Synthetic Forward
  • Extendible Forward
  • Risk Reversal / FX Collar
  • Participating Forward
  • Cap Loss Forward
  • Knock-In Forward
  • KIKO
  • Fade Forward
  • Ratio Knock-Out Forward
  • TARF
  • Liability Knock-Out TARF
  • EKI TARF
  • Pivot TARF
  • EKI Pivot TARF
  • Barrier Options
    • Introduction
    • Types of Barriers
    • Time Aspect
    • Knock-In
    • Knock-Out
    • Knock In Knock-Out
  • Variations on Barrier Options
    • Double Knock-In
    • Double Knock-Out
    • European Knock-Out
    • Knock-In European Knock-Out
    • Knock-Out European Knock-Out
    • Performance Knock-In
    • Performance Knock-Out
    • Partial Knock-In
    • Partial Knock-Out
    • Partial Double Knock-Out
    • Forward Knock-In
    • Forward Knock-Out
    • Forward Double Knock-Out
    • Forward Knock-In Knock-Out
    • Knock-Out with Rebate
    • Discrete Knock-Out
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  • American
  • Discrete
  • Single
  • Double
  • Sequential
  • Parisian
  1. Barrier Options

Types of Barriers

American

A barrier that is continuously observed throughout the life of the option.

Discrete

A barrier that is observed only at one or several predefined times (as opposed to continuous), typically on observable fixing pages.

Single

Single Barrier - any barrier option with one barrier which, if hit, will Knock-In (Knock-Out) the option. Single barrier options can be further categorised into sub-types:

Out of the money barriers - this means that the option is OTM when the barrier is hit.

In the money barriers - sometimes called reverse barrier options. These are options that have positive intrinsic value (are ITM) when the barrier is hit.

Double

Double Barrier - any barrier option with two barriers where, if either barrier is hit, will Knock-In (Knock-Out) the option.

Sequential

Any barrier option with more than one barrier where one or more of the barriers can affect the option differently. E.g., an option that can Knock-Out and/or Knock-In. Once knocked out it can never be knocked in. If first knocked in, it can still be knocked out later.

Parisian

A barrier option that requires a number of events to be triggered rather than just one. E.g., a Knock-Out option where the spot exchange rate must trade at or through the barrier for five consecutive days in order to be knocked out.

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Last updated 2 years ago