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

question 8

Multiple Choice

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.

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