Ratio Knock-Out Forward

The Knock-Out can be modelled as continuous throughout the entire period of the hedge, windowed between certain dates, or monitored solely at expiry.

The Ratio Knock-Out Forward is a variation which uses leverage to further improve the ITM Strike.

Payoff Diagram:

Payoff at Expiry:

At expiry if EURUSD fixes:

• Above the Knock-Out Barrier, the strategy is cancelled and the client will find itself unhedged.

• Above the Strike but below the Knock-Out Barrier, 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 200% of the Notional.