A barrier option (particularly a European barrier option) which has a fluffy barrier. The fluffy barrier has a progressive or gradual effect, as it is linked to the distance the underlying has traveled through the barrier level. In other words, the fluffy barrier activates (knocks in) or deactivates (knocks out) in a non-binary way. The knock-in and knock-out levels are linear between the lower and upper fluffy barrier limits. For example, a barrier option can be furnished with a barrier range of 5.0 to 5.2 so that the option loses 30% of its nominal (notional size of the contract) when 5.2 is hit, 50% when 5.1 is hit, 80% when 5.15 is hit, and 100% when 5.2 is hit.
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