Barrier Option

A barrier option is a type of option which is based on a predetermined rate known as a barrier level. Whether or not the price of the underlying asset reaches the barrier level determines whether the underlying asset is bought (call option), sold (put option) or not transacted.

Common types of barrier options include: down-and-in barrier options; down-and-out barrier options; up-and-in barrier options; up-and-out barrier options.

The barrier level may apply to the entire option term, in which case the action attached to a rate falling below or rising above the barrier level will take effect if the rate reaches the barrier level at any point during the option term. In the case of a point barrier option, the barrier only applies on a specific date, and the action only takes effect if the rate reaches or surpasses the barrier level on that date (the last day of the option term, for example).

An option may have multiple barrier levels. For example, a double barrier option has an upper knock-in or knock-out price and a lower knock-in or knock-out price. A mulitple barrier option may also have a series of barrier levels, with a different action attached to each barrier level.

More on this topic:
Interactive stock broker comparison

Special offers for Moneyland users

Moneyland Special Offers

Swiss Trading Platform

Cornèrtrader Special Offer

  • Special offer: particularly favorable conditions for Moneyland users

  • No custody account fees for shares

  • Swiss online bank with FINMA license

Swiss Broker

Saxo Bank Special Offer

  • Special offer: Reimbursement of brokerage fees up to CHF 200 for 90 days

  • Licensed Swiss bank (FINMA)

  • Free expert research and trading signals

Swiss digital bank

Alpian

  • CHF 100 welcome bonus

  • Favorable foreign exchange rates

  • Multi-currency account with Visa card (CHF, EUR, USD, GBP) 

Funds

Allianz Fund Investments

  • Special offer with CHF 200 welcome bonus

  • No prior knowledge necessary: Advice from experts

  • One of the 10 largest asset managers worldwide

Special offers for Moneyland users

Moneyland Special Offers

Swiss Trading Platform

Cornèrtrader Special Offer

  • Special offer: particularly favorable conditions for Moneyland users

  • No custody account fees for shares

  • Swiss online bank with FINMA license

Swiss Broker

Saxo Bank Special Offer

  • Special offer: Reimbursement of brokerage fees up to CHF 200 for 90 days

  • Licensed Swiss bank (FINMA)

  • Free expert research and trading signals

Swiss digital bank

Alpian

  • CHF 100 welcome bonus

  • Favorable foreign exchange rates

  • Multi-currency account with Visa card (CHF, EUR, USD, GBP) 

Funds

Allianz Fund Investments

  • Special offer with CHF 200 welcome bonus

  • No prior knowledge necessary: Advice from experts

  • One of the 10 largest asset managers worldwide

Deal of the Day
×
Swiss Trading Platform

Cornèrtrader Special Offer

Special offer: particularly favorable conditions for Moneyland users

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.