An exchange rate knock out option is a financial contract of the following type. If an exchange rate remain within specified bounds until the exercise date, the payout will equal that of a call (put) option. If at any time the exchange rate hits the barrier, the payout is zero. See the following graph.
An exchange rate knock in option is just the reverse: if the exchange rate never hits the barrier, the payout is zero; if the exchange rate does pass the barrier, the payout equals that of a call (put) option.
In HedgeOne, the user defines exchange rate knock in (knock out) options through the following dialog window.
