Double Barrier Option

AAA

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.

RELATED TERMS
  1. Exotic Option

    An option that differs from common American or European options ...
  2. Barrier Option

    A type of option whose payoff depends on whether or not the underlying ...
  3. Knock-In Option

    A latent option contract that begins to function as a normal ...
  4. Knock-Out Option

    An option with a built in mechanism to expire worthless, should ...
  5. Rebate Barrier Option

    A financial derivative product that will automatically expire ...
  6. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
Related Articles
  1. What do all of the letters in a stock ...
    Options & Futures

    What do all of the letters in a stock ...

  2. Pick the Right Brokerage Account for ...
    Options & Futures

    Pick the Right Brokerage Account for ...

  3. The Top Technical Indicators For Options ...
    Options & Futures

    The Top Technical Indicators For Options ...

  4. How To Buy Oil Options
    Options & Futures

    How To Buy Oil Options

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center