Jump to content

how to calculate corelation between FX and barrier options prices


Guest tarascon

Recommended Posts

Guest tarascon

We know that barrier option move/reflect like fx prices.
Let say we enter EURUSD market in barrier option when fx price is 1.1200
then we want to place a stop in barrier option that would be equivalent as having a stop in fx of lest say 50 pips.
how do we calculate the barrier option price for that stop?

Thank you.

Claude

Link to comment

The Barrier price is the distance between IG’s underlying price and the knock out level + premium. For example as below, the market is 28725 and the KO is 27000 (which is a difference of 1275). The KO premium is 10, so the price is 1285.

image.png

In your example the barrier price is the 50 points plus whatever the KO premium is. 

If you fill in a deal ticket, the premium and price should auto populate. 

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...
us