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For whom it is intended:
Definition:
This refers to a transaction that combines a currency barrier (knock-out) call option and a currency barrier (knock-out) put option with several partial settlement dates. This relates to a zero cost option strategy in which one party purchases a right to buy or to sell a given currency and at the same time sells a right to buy or to sell that same currency. If on any partial settlement date the relevant currency option is exercised, then the client cumulates the profit to that date. If the client’s accumulated profit will at some point reach an amount agreed in advance, then both currency barrier options are deactivated.
The notional amounts of the two options can be the same. A capped structure is more common, however, and thus the notional amounts of the two options differ.
Advantages of the product:
Disadvantages of the product:
Conditions of concluding a transaction:
For more information, please contact your bank advisor.
