A knock-in option is a type of barrier option that is triggered only after the price of the underlying asset reaches a certain predetermined barrier.
There are two types of entry options: down and inside and up and inside. In the first case, the option is triggered only if the price of the underlying asset falls below a certain level. The last type of option is triggered only after the price of the underlying asset rises to a certain level.
A collar is an options strategy that involves buying a put option down and selling a put option up, which is used to protect against large losses but also cap large profits up.
A full ratchet is an anti-dilution provision that applies the lowest selling price as the option’s adjusted price or conversion rate to existing shareholders.
The interest rate collector uses option contracts to hedge interest rate risk to protect floating rate borrowers from rate hikes or lenders from falling rates in the event of a reverse collar.
A long straddle is an option strategy that involves buying both a long call and a long put on the same underlying asset with the same expiration date and strike price.
The option-adjusted spread (OAS) measures the difference in yield between a bond with an embedded option, such as an MBS or callable, and the yield on a Treasury bond.