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Double Knock-In Option


A double 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 breaks through either barrier at any time during the option’s life, the option gets knocked-in and acts like a vanilla option, and the holder would receive a specified payout. However, if one of the barriers has not been broken through, the option dies out.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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