ko_selectize.js ; Full details and demo here - http://motorscript.com/selectize-js-binding-knockout-js/

ko_selectize.js

var inject_binding = function (allBindings, key, value) {
    //https://github.com/knockout/knockout/pull/932#issuecomment-26547528
    return {
        has: function (bindingKey) {
            return (bindingKey == key) || allBindings.has(bindingKey);
        },
        get: function (bindingKey) {
            var binding = allBindings.get(bindingKey);
            if (bindingKey == key) {
                binding = binding ? [].concat(binding, value) : value;
            }
            return binding;
        }
    };
}

ko.bindingHandlers.selectize = {
    init: function (element, valueAccessor, allBindingsAccessor, viewModel, bindingContext) {
        if (!allBindingsAccessor.has('optionsText'))
            allBindingsAccessor = inject_binding(allBindingsAccessor, 'optionsText', 'name');
        if (!allBindingsAccessor.has('optionsValue'))
            allBindingsAccessor = inject_binding(allBindingsAccessor, 'optionsValue', 'id');
        if (typeof allBindingsAccessor.get('optionsCaption') == 'undefined')
            allBindingsAccessor = inject_binding(allBindingsAccessor, 'optionsCaption', 'Choose...');

        ko.bindingHandlers.options.update(element, valueAccessor, allBindingsAccessor, viewModel, bindingContext);

        var options = {
            valueField: allBindingsAccessor.get('optionsValue'),
            labelField: allBindingsAccessor.get('optionsText'),
            searchField: allBindingsAccessor.get('optionsText')
        }

        if (allBindingsAccessor.has('options')) {
            var passed_options = allBindingsAccessor.get('options')
            for (var attr_name in passed_options) {
                options[attr_name] = passed_options[attr_name];
            }
        }

        var $select = $(element).selectize(options)[0].selectize;

        if (typeof allBindingsAccessor.get('value') == 'function') {
            $select.addItem(allBindingsAccessor.get('value')());
            allBindingsAccessor.get('value').subscribe(function (new_val) {
                $select.addItem(new_val);
            })
        }

        if (typeof allBindingsAccessor.get('selectedOptions') == 'function') {
            allBindingsAccessor.get('selectedOptions').subscribe(function (new_val) {
                // Removing items which are not in new value
                var values = $select.getValue();
                var items_to_remove = [];
                for (var k in values) {
                    if (new_val.indexOf(values[k]) == -1) {
                        items_to_remove.push(values[k]);
                    }
                }

                for (var k in items_to_remove) {
                    $select.removeItem(items_to_remove[k]);
                }

                for (var k in new_val) {
                    $select.addItem(new_val[k]);
                }

            });
            var selected = allBindingsAccessor.get('selectedOptions')();
            for (var k in selected) {
                $select.addItem(selected[k]);
            }
        }


        if (typeof init_selectize == 'function') {
            init_selectize($select);
        }

        if (typeof valueAccessor().subscribe == 'function') {
            valueAccessor().subscribe(function (changes) {
                // To avoid having duplicate keys, all delete operations will go first
                var addedItems = new Array();
                changes.forEach(function (change) {
                    switch (change.status) {
                        case 'added':
                            addedItems.push(change.value);
                            break;
                        case 'deleted':
                            var itemId = change.value[options.valueField];
                            if (itemId != null) $select.removeOption(itemId);
                    }
                });
                addedItems.forEach(function (item) {
                    $select.addOption(item);
                });

            }, null, "arrayChange");
        }

    },
    update: function (element, valueAccessor, allBindingsAccessor) {

        if (allBindingsAccessor.has('object')) {
            var optionsValue = allBindingsAccessor.get('optionsValue') || 'id';
            var value_accessor = valueAccessor();
            var selected_obj = $.grep(value_accessor(), function (i) {
                if (typeof i[optionsValue] == 'function')
                    var id = i[optionsValue]
                else
                    var id = i[optionsValue]
                return id == allBindingsAccessor.get('value')();
            })[0];

            if (selected_obj) {
                allBindingsAccessor.get('object')(selected_obj);
            }
        }
    }
}

selectize_examples.html

<h3>1. Using selectize with plain select tag, with values built in view.</h3>
<select data-bind="selectize: {}">
	<option value="1">Val 1</option>
	<option value="2">Val 2</option>
</select>	

<h3>2. Using values from observable array.</h3>
<select data-bind="selectize: items, value: item_id"></select>

<h3>3. Getting selected item as an object</h3>
<select data-bind="selectize: items, value: my_item_id, object: my_item"></select>

<h3>4. Using with multiselect</h3>
<select data-bind="selectize: items, selectedOptions: selected_items" multiple></select>

<h3>5. Passing additional options</h3>
<select data-bind="selectize: items, selectedOptions: selected_items2, options: {plugins: ['remove_button']}" multiple></select>

vm.js

$(document).ready(function(){
	ko.applyBindings(new TestVM(););
});

function TestVM(){
	var self = this;

	self.items = ko.observableArray([
		{'id': 1, 'name': 'One'},
		{'id': 2, 'name': 'Two'}
		]);

	self.item_id = ko.observable();

	self.my_item_id = ko.observable();

	self.my_item = ko.observable();

	self.selected_items = ko.observableArray([1]);

	self.selected_items2 = ko.observableArray();
}

How would this work with option groups?