Down-and-Out Option

What does it mean?
A type of knock-out barrier option that ceases to exist when the price of an underlying security sinks to a specific barrier price level.

In Other Words...
If the price of the underlying asset does not reach the barrier level, the investor will have the right to exercise their european call or put option at the exercise price specified in the contract. Should the barrier price level be reached, the option will expire worthless.

Related Links
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.

Related Terms
Barrier Option | Down-and-In Option | European Option | Knock-Out Option | Option

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