A stock index knock out option is a financial contract of the following type. If a stock index remains within specified bounds until the exercise date, the payout will equal that of a call (put) option. If at any time the stock index hits the barrier, the payout is zero. See the following graph.

A stock index knock in option is just the reverse: if the stock index never hits the barrier, the payout is zero; if the index does pass the barrier, the payout equals that of a call (put) option.

The following is a sample dialog window for stock index knock in/knock out options.

Equity