> 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/knock-in-forward.md).

# Knock-In Forward

Also known as Forward Plus, Forward Extra

{% hint style="info" %}
The Knock-In Forward is a simple and yet efficient hedging strategy that offers a worst case guaranteed strike rate.

The client has the right but not the obligation to hedge at this rate provided that spot does not trade at or beyond a pre-determined Knock-In Rate. Else, the client is locked into a synthetic forward rate obligation at that strike rate.
{% endhint %}

### **Payoff Diagram:**

<figure><img src="https://3557203473-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FYQ7mk2lqrd7KNTuAuSYT%2Fuploads%2FAQ8oTWocBxEjQLuYbhGw%2FRHS%20KI%20Fwd.png?alt=media&amp;token=f31a274c-a84e-4841-85d8-6df503e619d8" alt="Knock-In 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;
  * The profit on the derivative will fully net off against the loss on the underlying exposure.
* Between the Strike and above the Knock-In Barrier, the client can participate in the favourable movement and transact at the improved Spot Rate.
* Below the Knock-In Barrier, the client will find itself obligated to trade at the Strike level on 100% of the Notional.