A type of barrier (in barrier options, particularly American barrier options) that if hit anytime during the life of the option, the option is immediately knocked in (knock-in option) or out (knock-out option), depending on its type. An American barrier is characterized by the ability of an option to activate or deactivate anytime over its lifespan, including on its expiration date.

In an American barrier option, the holder has the right to exercise at any time insofar as the option has not expired. In other words, the barrier option is embedded with an early exercise right. For example, an American up-and out call option vanishes away when the up-barrier is breached by the underlying price or the option is early terminated by the holder exercising the right.