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Derivatives

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  • June 24, 2022
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Down-and-Out Call

A down-and-out option (literally, a knock-out barrier option) that deactivates, i.e., expires if the market price of the underlying falls to a specified trigger price. Otherwise, it remains a call option that can be exercised at the holder’s discretion. The trigger lies below the underlying’s price at initiation, hence the “down” move labeling the option.


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