| Down-and-In Option |
A form of a knock-in option whose payoff is determined by the price of the underlying asset sinking to the barrier price level.
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If the underlying asset does reach the barrier price level, the down-and-in option becomes a vanilla European call or put option. If the underlying asset price does not reach the barrier level, the option expires worthless. Investors may choose a down-and-in option rather than directly purchasing the vanilla option, as option premiums tend to be significantly lower for knock-in options.
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Options Basics Tutorial - An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them. |
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Related Terms
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