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currency pair trades at or beyond a specified price level (barrier) before expiry. In other words, you get knocked into a vanilla call option if the currency pair touches a certain price.

Traders use knock-in call options when they believe a currency pair is going to go up before the option expires but not before it experiences some volatility and goes down before it goes up again. Here's how it works. You will be profitable with a knock-in call option if the currency pair drops down to and touches the barrier, knocks you into the vanilla call option and then turns around and rises up past the strike price and the breakeven price before the option expires.

For example, imagine you buy a knock-in call option on the EUR/USD with a strike price of 1.4100, a barrier of 1.4000 and a breakeven point of 1.4150. If the EUR/USD currency pair drops down to the barrier at 1.4000, knocks you into the vanilla call option and then turns around and moves back up above the breakeven point at 1.4150, you will be profitable on your knock-in call option trade.

You can see a risk graph for a knock-in call option below. Remember that the risk graph only looks like this if the currency pair drops down to the barrier and knocks you into the vanilla call option. Otherwise, the risk graph would be blank because you would never have been knocked in.

When you trade a knock-in call option, one of the following four things will happen:

A knock-in put option is an option that automatically becomes a normal vanilla put option when the underlying currency pair trades at or beyond a specified price level (barrier) before expiry. In other words, you get knocked into a vanilla put option if the currency pair touches a certain price.

Traders use knock-in put options when they believe a currency pair is going to go down before the option expires but not before it experiences some volatility and goes up before it goes down again. Here's how it works. You will be profitable with a knock-in put option if the currency pair rises up to and touches the barrier, knocks you into the vanilla put option and then turns around and falls down past the strike price and the breakeven price before the option expires.

For example, imagine you buy a knock-in put option on the USD/CHF with a strike price of 1.1300, a barrier of 1.1400 and a breakeven point of 1.1250. If the USD/CHF currency pair rises up to the barrier at 1.1400, knocks you into the vanilla put option and then turns around and moves back down below the breakeven point at 1.1250, you will be profitable on your knock-in put option trade.

You can see a risk graph for a knock-in put option below. Remember that the risk graph only looks like this if the currency pair rises up to the barrier and knocks you into the vanilla put option. Otherwise, the risk graph would be blank because you would never have been knocked in.

When you trade a knock-in put option, one of the following four things will happen:

A knock-out call option is an option that automatically expires worthless when the underlying currency pair trades at or beyond a specified price level (barrier) before expiry. In other words, you get knocked out of a vanilla call option if the currency pair touches a certain price.

Traders use knock-out call options when they believe a currency pair is going to go up and that it is going to remain above a fixed level of support until the option expires. You will be profitable with a knock-out call option if the currency pair stays above the barrier, leaves you in the vanilla call option and rises up past the strike price and the breakeven price before the option expires.

For example, imagine you buy a knock-out call option on the EUR/USD with a strike price of 1.4100, a barrier of 1.4000 and a breakeven point of 1.4150. If the EUR/USD currency pair remains above the barrier at 1.4000, keeps you in the vanilla call option and moves up above the breakeven point at 1.4150, you will be profitable on your knock-out call option trade.

You can see a risk graph for a knock-out call option below. Remember that the risk graph only looks like this if the currency pair remains above the barrier and keeps you in the vanilla call option. Otherwise, the risk graph would be blank because you would have been knocked out of the vanilla call option.

When you trade a knock-out call option, one of the following four things will happen:

A knock-out put option is an option that automatically expires worthless when the underlying currency pair trades at or beyond a specified price level (barrier) before expiry. In other words, you get knocked out of a vanilla put option if the currency pair touches a certain price.

Traders use knock-out put options when they believe a currency pair is going to go down and that it is going to remain below a fixed level of resistance until the option expires. You will be profitable with a knock-out put option if the currency pair stays below the barrier, leaves you in the vanilla put option and falls down past the strike price and the breakeven price before the option expires.

For example, imagine you buy a knock-out put option on the USD/CHF with a strike price of 1.1300, a barrier of 1.1400 and a breakeven point of 1.1250. If the USD/CHF currency pair remains below the barrier at 1.1400, keeps you in the vanilla put option and moves down below the breakeven point at 1.1250, you will be profitable on your knock-out put option trade.

You can see a risk graph for a knock-out put option below. Remember that the risk graph only looks like this if the currency pair remains below the barrier and keeps you in the vanilla put option. Otherwise, the risk graph would be blank because you would have been knocked out of the vanilla put option.

When you trade a knock-out put option, one of the following four things will happen:

A double knock-in call option is an option that automatically becomes a normal vanilla call option when the underlying currency pair trades at or beyond one of two specified price levels (barriers) before expiry. In other words, you get knocked into a vanilla call option if the currency pair touches either one of two predetermined prices.

Traders use double knock-in call options when they believe a currency pair is going to go up before the option expires but not before it experiences some volatility and either goes down before it goes up again or goes up dramatically. Here's how it works. You will be profitable with a double knock-in call option if one of the following two things happens:

• The currency pair drops down to and touches the lower barrier, knocks you into the vanilla call option and then turns around and rises up past the strike price and the breakeven price before the option expires.
• The currency pair rises dramatically and touches the upper barrier, knocks you into the vanilla call option and then remains above the breakeven price until the option expires.

For example, imagine you buy a double knock-in call option on the EUR/USD with a strike price of 1.4100, a lower barrier of 1.4000, an upper barrier of 1.4200 and a breakeven point of 1.4150. If the EUR/USD currency pair drops down to the lower barrier at 1.4000, knocks you into the vanilla call option and then turns around and moves back up above the breakeven point at 1.4150, you will be profitable on your knock-in call option trade. You will also be profitable if the EUR/USD currency pair rises up to the upper barrier at 1.4200, knocks you into the vanilla call option and then remains above the breakeven point at 1.4150 until expiration.

You can see a risk graph for a double knock-in call option below. Remember that the risk graph only looks like this if the currency pair either drops down to the lower barrier and knocks you into the vanilla call option or if it rises up to the upper barrier and knocks you into the vanilla call option. Otherwise, the risk graph would be blank because you would never have been knocked in.

When you trade a double knock-in call option, one of the following four things will happen:

A double knock-in put option is an option that automatically becomes a normal vanilla put option when the underlying currency pair trades at or beyond one of two specified price levels (barriers) before expiry. In other words, you get knocked into a vanilla put option if the currency pair touches either one of two predetermined prices.

Traders use double knock-in put options when they believe a currency pair is going to go down before the option expires but not before it experiences some volatility and either goes up before it goes down again or goes down dramatically. Here's how it works. You will be profitable with a double knock-in put option if one of the following two things happens:

• The currency pair rises up to and touches the upper barrier, knocks you into the vanilla put option and then turns around and falls down past the strike price and the breakeven price before the option expires.
• The currency pair falls dramatically and touches the lower barrier, knocks you into the vanilla put option and then remains below the breakeven price until the option expires.

For example, imagine you buy a double knock-in put option on the USD/CHF with a strike price of 1.1300, an upper barrier of 1.1400, a lower barrier of 1.1200 and a breakeven point of 1.1250. If the USD/CHF currency pair rises up to the upper barrier at 1.1400, knocks you into the vanilla put option and then turns around and moves back down below the breakeven point at 1.1250, you will be profitable on your knock-in put option trade. You will also be profitable if the USD/CHF currency pair falls down to the lower barrier at 1.1200, knocks you into the vanilla put option and then remains below the breakeven point at 1.1250 until expiration.

You can see a risk graph for a double knock-in put option below. Remember that the risk graph only looks like this if the currency pair either drops down to the lower barrier and knocks you into the vanilla put option or if it rises up to the upper barrier and knocks you into the vanilla put option. Otherwise, the risk graph would be blank because you would never have been knocked in.

When you trade a double knock-in put option, one of the following four things will happen:

A double knock-out call option is an option that automatically expires worthless when the underlying currency pair trades at or beyond one of two specified price levels (barriers) before expiry. In other words, you get knocked out of a vanilla call option if the currency pair touches either one of two predetermined prices.

Traders use double knock-out call options when they believe a currency pair is going to go up before the option expires but that it is not going to go up or down too far. Here's how it works. You will be profitable with a double knock-out call option if the currency pair rises above the breakeven price but does not touch the upper barrier before the option expires.

For example, imagine you buy a double knock-out call option on the EUR/USD with a strike price of 1.4100, a lower barrier of 1.4000, an upper barrier of 1.4200 and a breakeven point of 1.4150. If the EUR/USD currency pair rises above the breakeven price at 1.4150 while remaining below the upper barrier at 1.4200, you will be profitable.

You can see a risk graph for a double knock-out call option below. Remember that the risk graph only looks like this if the currency pair remains above the lower barrier and below the upper barrier. Otherwise, the risk graph would be blank because you would have been knocked out of the option.

When you trade a double knock-out call option, one of the following five things will happen:

A double knock-out put option is an option that automatically expires worthless when the underlying currency pair trades at or beyond one of two specified price levels (barriers) before expiry. In other words, you get knocked out of a vanilla put option if the currency pair touches either one of two predetermined prices.

Traders use double knock-out put options when they believe a currency pair is going to go down before the option expires but that it is not going to go up or down too far. Here's how it works. You will be profitable with a double knock-out put option if the currency pair falls below the breakeven price but does not touch the lower barrier before the option expires.

For example, imagine you buy a double knock-out put option on the USD/CHF with a strike price of 1.1300, a lower barrier of 1.1200, an upper barrier of 1.1400 and a breakeven point of 1.1250. If the USD/CHF currency pair falls below the breakeven price at 1.1250 while remaining above the lower barrier at 1.1200, you will be profitable.

You can see a risk graph for a double knock-out put option below. Remember that the risk graph only looks like this if the currency pair remains above the lower barrier and below the upper barrier. Otherwise, the risk graph would be blank because you would have been knocked out of the option.

When you trade a double knock-out put option, one of the following five things will happen:

A one-touch option is an option that automatically pays a set amount when the underlying currency pair trades at or beyond a specified price level (barrier) before expiry. In other words, you make money on a one-touch option if the currency pair touches a predetermined price.

Traders use one-touch options when they believe a currency pair is going to reach a certain price before the option expires. Here's how it works. If you choose a barrier above the current price of the currency pair, you will be profitable with a one-touch option if the currency pair rises up to, and touches, the barrier before the option expires. If you choose a barrier below the current price of the currency pair, you will be profitable with a one-touch option if the currency pair falls down to, and touches, the barrier before the option expires.

For example, imagine you buy a one-touch option on the EUR/USD with a barrier of 1.4200. If the EUR/USD currency pair moves to touch that barrier at 1.4200, you will be profitable.

You can see two risk graphs for a one touch option below. Looking at both of the risk graphs, you can see that you only make a profit if the currency price touches a certain price either above or below the current price of the currency pair.

When you trade a one-touch option, one of the following two things will happen:

A no-touch option is an option that automatically pays a set amount if the underlying currency pair never trades at or beyond a specified price level (barrier) before expiry. In other words, you make money on a no-touch option if the currency pair never touches a predetermined price.

Traders use no-touch options when they believe a currency pair is not going to reach a certain price before the option expires. Here's how it works. If you choose a barrier above the current price of the currency pair, you will be profitable with a no-touch option if the currency pair never rises up to, and touches, the barrier before the option expires. If you choose a barrier below the current price of the currency pair, you will be profitable with a no-touch option if the currency pair never falls down to, and touches, the barrier before the option expires.

For example, imagine you buy a no-touch option on the EUR/USD with a barrier of 1.4200. If the EUR/USD currency pair never moves to touch that barrier at 1.4200, you will be profitable.

You can see two risk graphs for a no-touch option below. Looking at both of the risk graphs, you can see that you only make a profit if the currency price never touches a certain price either above or below the current price of the currency pair.

When you trade a no-touch option, one of the following two things will happen:

A double no-touch option is an option that automatically pays a set amount if the underlying currency pair never trades at or beyond either of two specified price levels (barriers) before expiry. In other words, you make money on a double no-touch option if the currency pair never touches either one of two predetermined prices.

Traders use double no-touch options when they believe a currency pair is not going to reach either of two prices one above the current price of the currency pair and one below before the option expires. Here's how it works. You will be profitable with a double no-touch option if the currency pair never rises up to, and touches, or falls down to, and touches, either one of the barriers you have chosen before the option expires.

For example, imagine you buy a double no-touch option on the EUR/USD with one barrier of 1.4200 and another barrier of 1.4000. If the EUR/USD currency pair never moves up to touch the barrier at 1.4200, or down to touch the barrier at 1.4000, you will be profitable.

You can see the risk graph for a double no-touch option below. Looking at the risk graph, you can see that you only make a profit if the currency price never touches either one of two barriers either above or below the current price of the currency pair.

When you trade a double no-touch option, one of the following two things will happen: