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# Participating Forward
{% hint style="info" %}
The Participating Forward is one of the most conservative forward hedges available. As its name implies, this hedge allows a degree of "participation" in favourable spot movements, whilst providing a full hedge at the Guaranteed Strike Rate.
However, due to the participating feature, the hedge rate will be OTM compared to the prevailing outright forward. The case below illustrates the payoff profile of the hedge for a buyer of EURUSD.
{% 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.
* The profit on the derivative will fully net off against the loss on the underlying exposure.
* Below the Strike, the client will find itself obligated to trade at the Strike level on 40% of the Notional.
* This 40% is unable to benefit from the favourable movement in spot.
* However, since the obligation is less than 100%, the 60% element that is not obligated at the Strike (i.e.,. 100% minus 40%), can be freely converted at the improved rate.
* The client is therefore able to secure a blended rate that enables them to participate in the favourable move.
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