Islamic Finance
Al-Kafeel
October 1, 2020
Derivatives
Knock-Out Option
October 2, 2020

An out-of-the-money call option. Always from buyer’s perspective, it is a call option whose underlying’s market price at a given point within its time to maturity (for American options) or at expiration date (for European options) falls short of the combined value of its strike price and the premium.

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