In
finance, a barrier option, also known as knock out 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 charging as much premium. For example, if you believe that IBM will go up this year, but are willing to bet that it won't go above $100, then you can buy the barrier and pay less premium than the vanilla option.
See more at Wikipedia.org...