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Knock-out Option

Concept of Knock-out Option in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): An option (i.e. the right to buy or sell a financial instrument at some agreed conditions) which ceases to be in effect at the crossing of a predetermined price barrier.

Resources

See Also

• Derivatives Contract

Wedding Cake

Concept of Wedding Cake in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): An option (i.e. the right to buy or sell a financial instrument at some agreed conditions) with a fixed payout which is based upon the fluctuations of an underlying floating rate, which is set within the parameters of predetermined barriers. The highest coupon is paid if the applicable rate remains within the inner range, whilst the coupon becomes gradually less if it moves outwards.

Resources

See Also

• Derivatives Contract