kick-in kick-out (KIKO) options?

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

  1. Lucky

    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?
     
    #1     Oct 30, 2008
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  2. Equalizer

    Equalizer

    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:
    https://gm.bankofny.com/Derivatives/ProductNotes/Currency.aspx?RowIndex=8
     
    #2     Oct 30, 2008
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  3. Lucky

    Lucky

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

    :p
     
    #3     Oct 30, 2008
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