> For the complete documentation index, see [llms.txt](https://eako-capital.gitbook.io/eako-user-guide/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://eako-capital.gitbook.io/eako-user-guide/cap-loss-forward.md).
# Cap Loss Forward
{% hint style="info" %}
The Cap Loss Forward combines an OTM option with a synthetic forward.\
\
The strategy enables the client to gain the protection of a forward position, whilst at the same time limiting the maximum negative mark-to-market (loss) that would otherwise arise were the forward to settle OTM.
The strategy is typically offered as a zero cost solution where the cost of the OTM option is funded by adjusting the synthetic forward rate.
{% endhint %}
### **Payoff Diagram:**
### **Payoff at Expiry:**
At expiry if EURUSD fixes:
* Above the Strike, the client is fully protected at the Strike on 100% of the Notional.
* Below the Strike but above the OTM Call Strike, the client will find itself obligated to trade at the Strike level on 100% of the Notional.
* Below the OTM Call Strike, the client rate will improve by 1pip for every pip that EURUSD fixes below the Call Strike.
* *Payoff = Min(Strike -(OTM Call Strike - Spot),Strike)*
---
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