Knock-In Option

Knock-In Option

A latent option contract that begins to function as a normal option ("knocks in") only once a certain price level is reached before expiration.

Notes:

Technically, this type of contract is not an option until a certain price is met, so if the price is never reached it is as if the contract never existed. Knock-ins are a type of barrier option that may be either 'down and in' or 'up and in'.

See also: Barrier Option, Down-and-In Option, Knock-out Option, Option, Up-and-In Option, Vanilla Option