Double Barrier Option

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DEFINITION of 'Double Barrier Option'

An option with two distinct triggers that define the allowable range for the price fluctuation of the underlying asset. In order for the investor to receive a payout, one of two situations must occur; the price must reach the range limits (for a knock-in) or the price must avoid touching either limit (for a knock-out).

INVESTOPEDIA EXPLAINS 'Double Barrier Option'

A double barrier option is a combination of two dependent knock-in or knock-out options. If one of the barriers are reached in a double knock-out option, the option is killed. If one of the barriers are reached in a double knock-in option, the option comes alive.

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    The option ticker explains four main things about the option: the underlying stock, whether it is a call or a put option, ... Read Full Answer >>
  2. How does the term 'in the money' describe the moneyness of an option?

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  3. What is the difference between in the money and out of the money?

    In options trading, the difference between "in the money" and "out of the money" is a matter of the strike price's position ... Read Full Answer >>
  4. If a long call is owned on the record date of a stock, is the owner of the option ...

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  5. How can an investor profit from the cyclical nature of the electronics sector?

    An investor can profit from the cyclical nature of the electronics sector in two ways. He can employ sector rotation, shifting ... Read Full Answer >>
  6. What does negative vega mean for credit spreads?

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