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In finance, a barrier option is an exotic derivative typically an option on the underlying asset whose price breaching the pre-set barrier level either springs the option into existence or extinguishes an already existing option.
- Where the option springs into existence on the price of the underlying asset breaching a barrier, it may be known as an "up and in," "knock-in," or "down and in" option.
- Where the option is extinguished on the price of the underlying asset breaching a barrier, it may be known as an "up and out," "knock-out," or "down and out" option.
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|Campbell R. Harvey's Hypertextual Finance Dictionary||Download this dictionary|
Option contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are exotic options.
| Barrier options in German | Barrier options in Polish
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