A Knock-Out option is an exotic option, commonly used for commodities and currencies,...
An option the existence of which is conditional upon a pre-set trigger price trading before the option's designated maturity. The option is deemed to exist unless the trigger price is touched before maturity. Legal Risk ( see also International Swap Dealers' Association Agreements) The general potential for loss due to the legal and regulatory interpretation of contracts relating to financial market transactions.
An option that becomes worthless in the event that the underlying commodity or currency crosses a certain price level.
An option that "dies" when a trigger event occurs. Typically when a price crosses a particular barrier it pulls the trigger.
An option that has reached its expiry date and is now worthless.
a conventional option until the price of the underlying reaches a pre-set barrier price, in which case it is extinguished and ceases to exist
a form of barrier option (see Barrier Options)
a form of derivative where the buyer has a right Advertisement - but not an obligation - to buy the underlying currency, commodity or other position at a set price
a simple option that automatically terminates if the underlying stock trades at or beyond the predetermined barrier level before the expiration of the option
An option that- is worthless at expiration if the underlying commodity or currency price reaches a specific price level.
See down-and-out option.
An option with a built in mechanism to expire worthless should a specified price level be exceeded.
A practice that gives the buyer a right, but not an obligation, to purchase an underlying commodity, currency or other position at a preset price. Knockout options are cheaper to purchase than regular options that allows buyers to take positions with less money than regular options-a practice frequently used by hedge funds and other speculators.