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Down-and-Out Put


A down-and-out option (specifically, a knock-out barrier option/ KO barrier option) that deactivates, i.e., expires if the market price of the underlying falls to a specified trigger price. Otherwise, it remains a put option that can be exercised at the holder’s discretion.

The trigger (of deactivation) lies below the underlying’s price at initiation, hence the “down” move labeling the option.



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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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