Down-and-In Option

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.

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.


Investment dictionary. . 2012.

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  • Down and In —    A trigger option that is activated when the price of the underlying instrument falls to a predetermined level. A type of barrier option.    ► See also Option …   Financial and business terms

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