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  • October 30, 2022
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Barrier Cap and Floor 

A path-dependent exotic option in which the two boundary protection levels (cap and floor) knock in or out when a specific barrier is traded through by the underlying rate. In other words, it is a cap and floor structure that is boosted with a barrier mechanism by which it gets activated or deactivated depending on the underlying rate breaking through the barrier. It differs from an ordinary cap and floor structure in that the cap and floor are inactive on the trade date, but will come into life should the barrier be crossed by the underlying rate.


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