> 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/extendible-forward.md).

# Extendible Forward

Extendibility is a feature that can be added to any strate

{% hint style="info" %}
An Extendible Forward is a forward contract with the potential to be renewed for one or more expiries if the final spot rate ends above (or below) a pre-specified barrier.\
\
Variations of the extension test condition may position the extension test date at an earlier point in time. This would enable the hedging counterparty to know on that date whether or not the forward will extend into the second period.
{% endhint %}

### **Payoff Diagram:**

<figure><img src="https://3557203473-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FYQ7mk2lqrd7KNTuAuSYT%2Fuploads%2FZlqzaDkc4elXYNKbEWVl%2FExtendible%20Forward.png?alt=media&amp;token=7ee7fd1f-11c3-4902-8c24-4ea1c4d7d5b7" alt="Extendible Forward Payoff Profile"><figcaption></figcaption></figure>

### **Payoff at Expiry:**

At expiry if EURUSD fixes:

* Above the Strike, the client is fully protected at the Strike on 100% of the Notional.&#x20;
* Below the Strike, the client will find itself obligated to trade at the Strike level on 100% of the Notional.

On the Extension Test Date, if EURUSD is below the Extension Test Rate, the strategy will continue for a second period (the "Extension Period"); otherwise, it will not and the client will be unhedged for that second period.