What does BARRIER OPTION mean?

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.