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Derivative Engines - Options Handbook
Introduction
Definition
Call / Put
Strike Price
Volatility
Implied Volatility
Pricing Options
Greeks
Delta Hedging
Volatility Trading
Currency Options
Moneyness
Strike vs Volatility
25 Delta BF & RR
Volatility Matrix
Option Types
Vanilla Options
Barrier Options
Knock In
Knock Out
Double Knock In
Double Knock Out
Knock In - Knock Out
Window Barrier Options
Binary Options
One Touch
No Touch
Double No Touch
Double One Touch
European Digital
European Digital Range
Range Accrual Options
Knock In – Knock Out:
In this
Barrier options
type there is one
knock in
and one
knock out
barrier. In the market KIKO is applied in two ways according to the validity period of the Knock Out;
Knock Out until expiration:
Option is opened invalid at the trade date. If until expiration Knock In barrier is hit and Knock Out barrier is not hit option will be priced like a
Vanilla option
at the expiry date. If until expiration Knock In Barrier is not hit or at any time Knock Out Barrier (Even though Knock In Barrier is hit before) is hit then option will end worthless.
Knock out until knock in:
Knock out until knock in option is opened invalid at the trade date. If until expiration Knock In barrier is hit and until Knock In event, Knock Out barrier is not hit option will be priced like a Vanilla option at the expiry date. If until expiration Knock In Barrier is not hit or at any time Knock Out Barrier (If Knock In is hit then Knock Out is canceled and is not followed) is hit then option will end worthless.
Derivative Engines is a Real Time option calculator. Please see the online option pricers below.
Options
Structured Products
Vanilla Options
Dual Currency Deposit
Multiple Options Portfolio
Asymetric Forward
Knock In Barrier Options
Zero Cost Collar
Knock Out Barrier Options
Seagull (3 Way Collar)