Retail Access, Customization, and Risks of Barrier Options

# Barriers on structured notes


# Barriers on structured notes












I asked a question here: Structuring and Customization

Thanks to all the contributors. However, I now have a follow-up question.

I would like to buy barrier options and I was informed from that post that the only way a retail trader can do that is through structured notes(e.g from rcb, exchanges e.t.c)

However, is it possible to also sell these barrier options on structured notes? and how customizable are the options(i.e can I chose specific strikes, barrier levels, underlying, time to expiration e.t.c)?

All contributions are welcomed. Thank you.

## Answer by AKdemy (score 4)

https://quant.stackexchange.com/a/65763

I may risk some negative reactions with that post. However, I prefer to write this rather than not doing it. After all, it should be fine to disagree and express concern.

From what I can tell, no one mentioned you cannot trade barrier options. Your question was about exotic options (whatever they are). You mentioned triple barriers. In a now deleted comment you explained you did not actually want triple barriers and explained a sequential Up In Down In barrier, to which I answered that structured products will most likely not offer such a combination because these are predominantly yield enhancing.

If you google you will find plenty of providers like IG that offer barriers. You mentioned in another deleted comment that you want touches - also not impossible, not even in Europe with ESMA. See Saxo Trader (you need to open a professional account as ESMA applies but there is in my opinion very good reason why this was introduced). This link should bring up a simple OT template to see what it looks like. In another deleted comment, you asked if you can buy and sell the same option (same strike, same barrier same expiry) simultaneously and added you know it is a zero sum game but you have reason to do so. If the link for Saxo works, you will see the bid ask spread...

I would suggest to ask yourself these questions:

- Do I know how to model barrier options?

- Do I have the tools to model them (market data, pricing engine, ...)?

- Have I traded options successfully with my own money (not necessarily barriers but generally)?

- Do I work as a trader?

If you do not tick 3 out of the 4 boxes, I cannot help but advice you to stop now and waste your money on something more useful than trading. Personally, I think anyone who wants to trade barriers, or touches, should be familiar with what is possible or not possible with structured notes.

I want to reiterate my suggestion that you are almost certainly better of convincing a firm you are good at option trading than doing this on your own. I mentioned your salary will dwarf your personal income unless you have a very high net worth (in which case is suggested reaching out to advisors of (U)HNWI as they are specialized in exactly this). If you google option trader salary, you find pages like Zippia or Glassdoor.

Now, compute what you expect to get as an average return (no matter where you look, on average, ~80% of retail investors lose money, and that is with products that are not made difficult to trade like touches), and put that in relation to what you can earn doing this for a living (without risking a cent of your own money).