A barrier option which has two barriers with respect to the strike price: an upper barrier and a lower barrier. The upper barrier defines a level where the trigger price is above the strike price, while the lower barrier establishes a point at which the trigger price is below the strike. If the underlying didn’t break out of either barrier at any time during the option’s life, the holder would receive a specified payout. Double barrier options are particularly useful for investors willing to take advantage of markets expected to trade within a range. They are most commonly used in forex, equity, commodities, and interest rate markets.
January 17, 2024