> 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/liability-knock-out-tarf.md).
# Liability Knock-Out TARF
{% hint style="info" %}
The addition of the Liability Knock-Out feature is a powerful risk mitigant tool that will eliminate the risk of leverage were the LKO barrier to be triggered.\
\
The LKO can either be modelled on a European or American basis.\
\
Furthermore, variations of this strategy (Accelerated/Advanced LKO TARF) would see the strategy terminate upon the triggering of the LKO barrier, with any outstanding Target balance paid upfront to the client.
{% endhint %}
### **Payoff Diagram:**
### **Payoff at Expiry:**
If the Liability Knock-Out Barrier has not been triggered prior to expiry:
At expiry if EURUSD fixes:
* Above the Strike, the client is fully protected at the Strike on 100% of the Notional subject to the target condition. Once the target is reached the strategy is cancelled and the client will become unhedged.
* Below the Strike, the client will find itself obligated to trade at the Strike level on 200% of the Notional.
If the Liability Knock-Out Barrier has been triggered prior to expiry:
At expiry if EURUSD fixes:
* Above the Strike, the client is fully protected at the Strike on 100% of the Notional subject to the target condition. Once the target is reached the strategy is cancelled and the client will become unhedged.
* Below the Strike, given that the leverage has been reduced from 200% to 0%, the client no longer facing any obligations and can transact at the more favourable market rate.
---
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