What Is a ‘Barrier Option’ and Why Is It Considered Non-Standardized?

A barrier option is a type of exotic option whose payoff depends on whether the underlying asset's price reaches or "hits" a predetermined level (the barrier) during the option's life. It is considered non-standardized because the barrier level, the type of barrier (knock-in or knock-out), and other features are customized to the buyer's specific needs.

These complex conditions prevent them from being easily traded on a standardized CLOB.