An options strategy that is based on two accumulator-in one-sided knock-out options on two different notionals and activation (knock-in) triggers. However, those two options have the same deactivation (knock out) trigger. In this sense, though the total notional of each of each option is preset, the final combined notional is not known on the trade date, but rather gradually accumulates over the option’s life. A proportion of of the predetermined notional is accumulated for each fixing the underlying price trades with respect to the knock in level.
This structured product allows the holder to leverage the notional if both knock in levels are traded through. Therefore, the holder will be able to accumulate two notional amounts, instead of one, provided that both knock in triggers are hit. This strategy helps investors determine protection rates according to their hedging requirements, as the knock out feature provides a tool for terminating the position when needed.
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