Up-and-Out Barrier Option

Up-and-Out Barrier Option

A up-and-out option is a type of knock-out barrier option that ceases to exist when the price of the underlying security rises above a specific price level, called the barrier price. Up-and-out barrier options expire worthless if the price of the underlying rises to the barrier price i.e. the knock-out price. At initiation of the trade, the spot price of the underlying in an up-and-out barrier is trading below the knock-out. If the barrier isn’t reached, the option can be exercised. The options may be cash-settled rather than through delivery of the underlying

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