Option Barrier Feature Terms

Definition

Option Barrier Feature Terms. Formal terms setting out when and under what circumstances the option contract is deemed to be in force. This takes the form of an event and the relationship between the event and the applicability of the option.

Issues and Challenges

After some research it was determined that the nature of the thing normally called "Feature" in an option is a contractual term defining when and under what circumstances the option itself is deemed be in force. In other words this is a set of contractual terms. Option features in this sense are "Knock In" or "Knock Out", each relating to a market event (usually a price reaching a given level). A third feature, "Knock In Knock Out" is really two of these and is represented as such in the Option terms i.e. there may be two of this Option Feature Terms term. The term "Barrier Option" applies to both of these, i.e. Knock In and Knock Out are types of Barrier Option. An option contract may or may not have a barrier option. If it does not, none of this applies. Others: knock in a knock out, knock in a digitale, if it exceeds one barrier you get a call; for another you get a put, and so on.

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.