knock-out option
(redirected from Knock Out Option)Knock-out option
An option that- is worthless at expiration if the underlying commodity or currency price reaches a specific price level.
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Knock-Out Option
An option contract that automatically expires, even before the expiration date, if the underlying asset reaches a certain price that would be disadvantageous to the option writer. If this price (called the knock-out) is reached, the option becomes worthless. Most of the time, the knock-out results in the holder losing the premium, though some knock-out options, known as rebate barrier options, refund part of it. See also: Barrier option.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
knock-out option
An option that loses its entire value in the event the underlying asset crosses a predetermined price level.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.