Currency Barrier Option 

Use

Currency barrier options have a defined upper and lower limit (instrike or outstrike), which distinguishes them from ordinary OTC options. If the market exceeds or falls below these limits, the option either becomes effective or expires depending on the option type. You enter these barriers together with the financial transaction data.

Using the knock-in/out activities, you activate the options for exercise/expiration.

You can check the in/out strikes of currency barrier options with the Expiration/barrier check in collective processing. By comparing the transaction data with the relevant rates, the system proposes a transaction (knock-in knock-out or expiration), for further processing of the transaction.

You can use the Option Price Calculator to calculate market-based option prices. The option price calculator takes into account the agreed Barriers and Rebates that are paid upon expiration of the option if necessary.

Rebates cannot be entered in the structure of the transaction.

Features

In Treasury Management, you can represent the basic option categories used for trading on the market. The basic categories for calls (purchase options) and for puts (sale options) are:

You can also enter double barrier options. They are activated or expire when the values exceed/fall below two barriers. A double barrier option knock-in becomes effective, for example, when either the upper limit is exceeded by the market or the market falls short of the lower limit.