A barrier call warrant that pays its holder (the investor) either the minimum amount specified in the contract or nothing (if no knock in event occurs), depending on the barrier level (barrier determination amount) being, or ending up, either equal to or above the barrier during the observation period. The predetermined amount depends on the movement of the underlying during the warrant’s term. When the underlying hits or trades through the barrier only once (a single time), the warrant pays off the amount specified.
The above-mentioned payoff mechanism does not permit a price recovery, as the holder can lose the entire amount invested in the warrant. If stipulated in the contract, the holder can still get the minimum amount in the unfavorable situation of loss.
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