There are several types of barriers:

At maturity: called the European barrier, the performance of the underlying is only observed at maturity. This is the most used type of protection.
Continuous: called a continuous American barrier, the performance of the underlying is observed without interruption throughout the life of the product.
At closing: called the American closing barrier, the performance of the underlying is observed at each price close.

In the context of American barriers, from the moment the barrier is exceeded once, it no longer exists.

For example, a European barrier at 60% of the initial level ensures that the investor can recover all of his capital if the underlying does not decline by more than 40%. Thus, if the underlying reaches 70% of its initial level at maturity, the investor recovers 100% of the capital. On the other hand, if the drop is 45%, the investor only recovers 55% of the initial capital.

However, there are other types of protection, less frequently used. Learn more

Glossary