# Barrier options

## Barrier options

Option contracts that remain dormant until a trigger point (the barrier price) is reached, at which point the call or put option is activated, and results either in a long or short options position, or in the automatic exercise of an options position. One example is an up-and-in call. Assume an exercise price of \$50 and a barrier price of \$53. If the stock stays below \$53, the call option cannot be exercised. If the stock price reaches the \$53 barrier price, the holder then has a call option on the shares at \$50. These are exotic options.

## Barrier Option

An option contract that may only be exercised when the underlying asset reaches some barrier price. A barrier option may either be a knock-in or a knock-out. A knock-in may only be exercised when the underlying asset rises above or falls below (depending on the particular terms) the barrier price. On the other hand, a knock-out automatically expires when the underlying asset rises above or falls below the barrier price. It is important to note that the barrier price is distinct from the exercise price, though, theoretically, they may be set at the same amount. See also: Exotic option.
References in periodicals archive ?
This larger tube holds up to 16 ounces and offers end-to-end and full-circumference decoration in a variety of barrier options.
10] derived an analytic formula for pricing double barrier options based on a time-fractional B-S equation.
It includes Plain Vanilla Options, Asian Options, all kinds of Barrier Options, Binary / Digital Options and Look-back Options.
Among the topics are multi-level Monte Carlo methods for applications in finance, asymptotic and non-asymptotic approximations for option valuation, discretization of backward stochastic Volterra integral equations, derivative-free weak approximation methods for stochastic differential equations, randomized multi-level quasi-Monte Carlo path simulation, applying simplest random walk algorithms for pricing barrier options, and dimension-wide decompositions and their efficient parallelization.
Available in multiple barrier options, they offer all the benefits of thermoformable materials plus the high-quality image of foil packages.
After reviewing the technical background, he covers simple exotic options, dual expiry options, two-asset rainbow options, barrier options, lookback options, Asian options, and exotic multi-options.
This paper examines the empirical performance of various option-pricing models in hedging exotic options, such as barrier options and compound options.
Robust static super-replication of barrier options.
Up & in puts are barrier options which become active only after the underlying asset reaches the barrier, which is set higher than the current market at the inception of the trade.
Heynene Kat (1994) e Armstrong (2001) derivaram uma solucao fechada para um caso intermediario entre as opcoes com monitoramento continuo e aquelas com monitoramento discreto (as chamadas opcoes europeias com barreira valida somente em uma janela de tempo especifica, ou window barrier options ou partial barrier options).
3] coated products, clear barrier options exist that can provide barrier properties comparable to or even better than aluminum foil and often at a lower price.
As we reported in April, stricter fuel-permeation regulations are pushing adoption of new barrier options for portable fuel containers (jerry cans) and small fuel tanks.

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