Financial Glossary - K

Kappa: The ratio of the dollar price change in the price of an option to a 1% change in the expected price volatility.

Keiretsu: A network of Japanese companies organized around a major bank.

Knock-in option: An option which pays nothing at expiry unless it is first “activated” as a result of the underlying variable reaching a pre-determined level.

Knock-out option: Begins life as a standard option but is “killed off” if an underlying variable touches a pre-determined level.