Knock Out:

Knock Out event shows that option is invalid and the options buyer can exercise at the expiry date. Knock Out Barrier Options are opened as valid. There is a Knock Out Level and if this level is reached anytime until expiration, option becomes invalid.

During the life of the option,

If knock out level is hit anytime, the knock out barrier option becomes worthless.

If knock out level is never hit, option becomes a vanilla option and priced as vanilla option.

Knock Out Barrier options can be priced by Derivative Engines Real Time Option Calculators.
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