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Hard Barrier Option


A barrier option which has a hard barrier (i.e., a level rather than a range). This option is typically knocked in or out in whole, rather than gradually. In other words, the whole contract is knocked in or out depending the underlying crossing the barrier. For example, suppose that the option is an up and out with a hard barrier of 100. If the maximum underlying value reached before expiration is 101 then the entire amount of potential payoff is lost.


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