Down-and-In Option

外汇网2021-06-19 13:47:23 142

A form of a knock-in option whose payoff is determined by the price of the underlying asset sinking to the barrier price level.

If the underlying asset does reach the barrier price level, the down-and-in option becomes a vanilla European call or put option. If the underlying asset price does not reach the barrier level, the option expires worthless. Investors may choose a down-and-in option rather than directly purchasing the vanilla option, as option pmiums tend to be significantly lower for knock-in options.

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