Assuming no rebates upon knock-out,a down-and-out call option is worth less than a vanilla call
A)When the knock-out barrier lies above the current stock price.
B)When the knock-out barrier lies below the current stock price.
C)When the knock-out barrier is far from the strike price.
D)Always.

Question

Quizplus · Accepted Answer

A down-and-out call option becomes worthless if the underlying asset price falls below the knock-out barrier. Therefore, it is always worth less than a vanilla call option, which does not have this risk.

Assuming No Rebates Upon Knock-Out,a Down-And-Out Call Option Is Worth