If you buy a knock-out call option with barrier $H$ satisfying $H K = S$ where $K$ and $S$ are the strike price and current price of the underlying, respectively, then your implied view of prices is that
A) Prices are going up to at least the level of the barrier.
B) Prices are going up, but at most to the level of the barrier.
C) Prices are moving down.
D) Prices may move up to the level of the barrier before moving down.

Question

If you buy a knock-out call option with barrier $H$ satisfying $H > K = S$ where $K$ and $S$ are the strike price and current price of the underlying, respectively, then your implied view of prices is that
A) Prices are going up to at least the level of the barrier.
B) Prices are going up, but at most to the level of the barrier.
C) Prices are moving down.
D) Prices may move up to the level of the barrier before moving down.

Quizplus · Accepted Answer

The Answer of If you buy a knock-out call option with barrier $H$ satisfying $H > K = S$ where $K$ and $S$ are the strike price and current price of the underlying, respectively, then your implied view of prices is that
A) Prices are going up to at least the level of the barrier.
B) Prices are going up, but at most to the level of the barrier.
C) Prices are moving down.
D) Prices may move up to the level of the barrier before moving down.

If You Buy a Knock-Out Call Option with Barrier HHH Satisfying H>K=SH > K = SH>K=S

If You Buy a Knock-Out Call Option with Barrier $H$ Satisfying $H > K = S$