AN EMPIRICAL EXAMINATION OF THE PRICING OF EXCHANGE- TRADED BARRIER OPTIONS.

This article examines the pricing of the exchange-trade barrier options. The pricing of barrier options may be compared both with their theoretical valuations and with the pricing of otherwise identical European options. In this study, barrier options traded on the Australian Stock Exchange are used for comparison between various barrier option prices. Observed barrier option prices are found to be greater than modeled barrier option prices, while observed European option prices are found to be less than modeled European option prices.