In investment, a barrier option is an exotic option on an underlying asset whose existence depends upon the underlying asset's price reaching pre-set barrier level: the derivative either springs into existence or, if the option already exists, it is extinguished.
A barrier option has a lower premium than a similar option without a barrier. Barrier options were created to provide the hedge of an option at a lower premium than a conventional option. For example, if an investor believes that the price of a particular common stock, now trading at $100 per share, will increase within the next 6 months, but will not reach $150 per share, you could buy the option with a barrier level of $150 at a lower premium than a conventional option on the same common stock.