Double Barrier Option

Double Barrier Option

An option with two distinct triggers that define the allowable range for the price fluctuation of the underlying asset. In order for the investor to receive a payout, one of two situations must occur the price must reach the range limits (for a knock-in) or the price must avoid touching either limit (for a knock-out).

Notes:

A double barrier option is a combination of two dependent knock-in or knock-out options. If one of the barriers are reached in a double knock-out option, the option is killed. If one of the barriers are reached in a double knock-in option, the option comes alive.

See also: Barrier Option, Exotic Option, Knock-In Option, Knock-Out Option