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Master in Finance Engineering? What does MFE mean? Barrier options: Barrier options don't exist anymore once they hit the barrier. No payout is possible. Not 0, Nothing.

Standard options can be exercised whether they are in or out of the money. Thus, a negative payoff is possible, just not rational.

The only option that has a zero payoff is an at-the-money option MFE Exam. Anonymous discussion finally?