kick-in kick-out (KIKO) options?

Discussion in 'Options' started by Lucky, Oct 30, 2008.

  1. Lucky


    I read an article this morning about Korean businesses recently losing over 60 billion won on kick-in kick-out (KIKO) currency options.

    I can't find any details about what those are.
    Anyone care to enlighten?
  2. These are bog standard exotic (read anything not vanilla Euro or American) Options, commonly referred to as Barrier Options.

    A KIKO is simply a double barrier option.

    Crossing of a barrier is an event that knocks in (activates) an inactive option, or knocks-out (de-activates) an active option. These are more common in FX.

    Double barrier options are usually priced using semi-analytic or pure numerical techniques.

    Also, google is your friend:
  3. Lucky


    Thanks, I've got a handle on barriers, had never heard the term kick-in kick-out used.