Balloon Option

A balloon option is a contractually driven choice or ability to buy all 99 red balloons in the store at half price after 5 p.m. on Saturdays.

No? Ok. A balloon option contract delivers a bigger payout when the price of the underlying stock on which that option is pegged…moves above the strike price. A strike price is the price at which a put or call option can be exercised.

For example, if the underlying security trades above $50 per unit, the strike price may increase by $3 for every extra dollar that the underlying security reaches.

Balloon options are most common in the land of currency trading.