Double No-Touch Option

Double no-touch options are just what they sound like: a game (or, a gamble).

Double no-touch options are options where the buyer gets a payout only if the asset underlying the option stays within certain price limits until time is up...that is, until the option expires. This is a binary option, which means it’s all or nothing.

The buyer and seller negotiate the price limits, called the “barrier levels,” before the double no-touch option game is set into action. If the option stays within the barrier levels, you get the pre-negotiated payout (minus what it cost you to buy the option though, if you want to know the net take-away).

What if you lose the game, and the option makes its way out of the barrier levels? Well, you just don’t win anything. And oh yeah, you lose the money and time that went into setting up the option in the first place. Not too shabby.

If you like this game, see: Double One-Touch Option.