BARRIER OPTION meaning in Law Dictionary

COMPLEX DERIVATIVE contract that produces or extinguishes an underlying EUROPEAN CHOICE as the price of the marketplace research moves through a specified BARRIER. Four versions of barrier alternative are commonly made use of, such as the DOWN PLUS SOLUTION, DOWN-AND-OUT OPTION, UP-AND IN CHOICE, or more AND away SOLUTION. The truth that the root choice might extinguished, or may not be developed, ensures that a barrier option is typically cheaper than an otherwise equivalent European alternative. Also called KNOCKIN SOLUTION, KNOCKOUT CHOICE. See additionally REVERSE BARRIER CHOICE.