Financial Law
Consensus Ad Idem
April 25, 2021
Financial Analysis
Earnings Capitalization Ratio
April 26, 2021

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.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts