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Barrier

• Is the threshold for an option feature to become active or inactive depending on the specifications. It also refers to a variety of option which has a barrier feature.

 
 Embedded terms in definition
 Active
Option
 
 Referenced Terms
 Chinese wall: A descriptive name for the division within a brokerage firm that prevents insider information from passing from corporate advisers to investment traders, who could use the information to reap illicit profits.Communication Barrier between financiers (investment bankers) and traders. This barrier is erected to prevent the sharing of inside information that bankers are likely to have.

 Down and in option: Barrier option that comes into existence if asset price hits a barrier.

 Down and out option: Barrier option that expires if asset price hits a barrier.

 Knock in and knock out options.: Types of Barrier options. In up and in option, option is dead unless it hits the up barrier during its life. In up and out option, option is dead if it hits the up barrier during its life. In down and in option, option is dead unless it hits the down barrier during its life. In down and out option, option is dead if it hits the down barrier during its life.

 
 Related Terms
 Barrier options

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