The barrier option adds a barrier value (for example, H = $95.00) and it the option can either "knock-out" (ie, get knocked-out if the barrier is breached) or "knock-in" (ie, come into existence if the barrier is breached. If the barrier is below the asset price, it is either a down-and-out or...
Can someone please clarify the difference between a barrier options and a gap option exactly? A gap is an option that gets exercised at 1 strike but its payoff is based on another strike. This sounds very similar to a barrier option which becomes activated on 1 barrier but its payoff...
Learning objectives: Identify and describe the characteristics and pay-off structure of the following exotic options: gap, forward start, compound, chooser, barrier, binary, lookback, shout, Asian, exchange, rainbow, and basket
730.1 A non-dividend paying stock is currently...
Would you kindly answer my following question?
Which of the following option strategies can give the buyer an unlimited profit?
a. An American digital option
b. A European lookback call option
c. A European butterfly spread
d. An up-and-out with rebate barrier option
The answer is B...