Barrier Options

Learn about Barrier Options and download pricing spreadsheets

Barrier options become active (or inactive) when the underlying asset crosses a price threshold. The threshold is also known as the trigger.

  • Knock-in options are initially inactive. However, they become active when the barrier is crossed
  • Knock-out options are initially active. However, they become inactive once the barrier is crossed

Additionally, Barrier options can be either European or American.

Reverse Barrier Option

Barrier options are cheaper than European options because of the possibility that the option is terminated if the barrier is crossed.

A standard barrier option has a barrier that is out-of-the-money. A reverse barrier option has a barrier that is in-the-money.

Download Excel Spreadsheet to Price Reverse Barrier Options

One thought on “Barrier Options

  1. Do you have a spreadsheet that can price a currency kick into forward option. It is a barrier with no premium that enter you into a FEC at slightly worse rate if the barrier is breached.

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