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  • July 3, 2020
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Shark Forward

A forward contract that allows firms to fix a forward price while benefiting from a predicted spot movement. It establishes a certain range of profit potential, while maintaining a worst case level close to the forward rate. This structure is composed of a forward contract with a forward price as the worst case and a reverse knock-out, whose payoff profile resembles a shark fin, as shown below:

Shark Plus

There are two kinds of shark forward contracts: shark forward plus and shark forward extra.

A Shark forward is sometimes known as a forward plus, a forward extra, and an enhanced forward.


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