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  • August 8, 2021
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Double Knock-Out Option

A double barrier option which has two barriers with respect to the strike price: an upper barrier and a lower barrier. The upper barrier defines a level where the trigger price is above the strike price, while the lower barrier establishes a point at which the trigger price is below the strike. If the underlying didn’t break out of either barrier at any time during the option’s life, the option acts like a vanilla option, and the holder would receive a specified payout. However, if one of the barriers has been broken through, the option dies out (gets knocked-out).


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