A type of barrier option in which another barrier option is initiated when one or two preset barriers are hit/ breached in a predefined order. Chained options usually come with the feature of discrete monitoring (discrete chained barrier option). For chained options, which already have a barrier, another barrier option is activated when a primary barrier is hit. Options with similar features are a variation of double barrier options.
For example, a down-and-in chained call option is a down-and-in call option (DIC) activated once the underlying asset price hits an upper barrier level, and an up-and-in chained call option is an up-and-in call option (UIC) which is activated when the asset price successively hits two different, preset barrier levels (an up-barrier followed by a down-barrier).
Chained barrier options are popular in over-the-counter equity and foreign exchange derivative markets.
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