A knock-out option is an option that settles to nothing if the price breaches some threshold (it is “knocked out”). The advantage is that this limits the risk for the issuer and thus the price to purchase the option is lower.
Jul 27, 2022
A knock-out option is an option that settles to nothing if the price breaches some threshold (it is “knocked out”). The advantage is that this limits the risk for the issuer and thus the price to purchase the option is lower.
