Barrier Option
Trade MechanicsAn option cancelled or created when the rate touches a stated level — path-dependent, and defined entirely by its contract's rules on what counts.
A barrier option is an option whose existence depends on whether the market rate touches a stated level before expiry. A knock-out ceases to exist if the level trades; a knock-in does not become an option until it does. The barrier is a term of the contract alongside the strike and the expiry, and it is what makes these contracts path-dependent: the same rate at expiry can produce two different outcomes depending on what happened on the way there.
Barriers change the shape of a contract's risk in a way that is easy to underestimate. A holder can be right about the direction and still finish with nothing, because the level was touched briefly at a moment of thin liquidity. What counts as a touch — which price source, which hours, whether a single print is enough — is defined in the contract terms, and those definitions are the whole of the argument when a dispute arises. Barrier structures are largely an institutional and structured-product market; whether anything of the kind is offered to a retail account is a question for the broker's own instrument list and documentation rather than an assumption.