Knock-in options are a type of exotic option that become active only when the underlying asset reaches a predetermined price level, known as the 'knock-in' barrier. These options are often used to hedge against market movements or to speculate on price movements, allowing investors to tailor their exposure based on specific market conditions. The activation of knock-in options is contingent upon the asset price hitting the barrier, which can create unique risk and reward scenarios compared to standard options.
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