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Exotic options
Besides the standard options – commonly referred to as vanilla options – Saxo Bank also offers exotic options.
• Knockout
minimum ticket fee threshold = 50.000 base currency
• Reverse knockout
minimum ticket fee threshold = 50.000 base currency
• Double knockout
minimum ticket fee threshold = 50.000 base currency
• Knock in
minimum ticket fee threshold = 50.000 base currency
• Reverse knock in
minimum ticket fee threshold = 50.000 base currency
• One-touch
minimum ticket fee threshold = 5.000 base currency payout
• No-touch
minimum ticket fee threshold = 5.000 base currency payout
• Double no-touch
minimum ticket fee threshold = 5.000 base currency payout
KNOCK OUT (minimum ticket fee threshold: 50.000 base currency nominal)
Knock out – an option that automatically expires worthless should a specified barrier level be traded at or
beyond before expiry. The spot moves towards "out-of-the-money" in order to reach out-strike.
A = Strike
B = Barrier
Knock Out Call example
Anticipating an increase in the spot, the investor buys a one-month EUR/USD Call with a strike of 1.3700 and an
outstrike of 1.35. The risk of the KO Call as opposed to vanilla Call is that the 1.35 level is touched which would
terminate the contract immediately. For a bought option this is the risk the investor takes in order to receive the
20 pips discount comparing to a vanilla.
Below is shown the specifics of the trade and the Greeks development within 3 different timeframes.
Trade details:
Currency: EURUSD
Type: KO Call
Strike: 1.3700
Knock Out: 1.3500
Expiry: 2 August 2007
Amount: EUR 1.000.000
Spot Ref: 1.3620 on 4 July 2007
Price: 38/ 42 (vanilla call, strike 1.37 for 2 Aug 2007 is 55/ 62)
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Knock Out Put example
Anticipating a decrease in spot, the investor buys a one-month EUR/USD Put with a strike of 1.3600 and an
outstrike of 1.3750. The risk of the KO Put as opposed to vanilla Put is that the 1.3750 level is touched w