Payoff for Korean Exporting Company

950

KRW/1USD

Profit

1010

890

KIKO: Knock In Knock Out

950

890

1010

960

Knock-Out

Buy 1 PutK=960

KIKO: Knock In Knock Out

950

890

1010

960

Sell 2(3) CallK=1010

Knock-In

950

890

1010

960

Knock-Out

Buy 1 Put

Sell 2(3) Call

Knock-In

+

+Naked Position

Payoff with KIKO contract

950

890

1010

960

Knock-Out

Buy 1 Put

Sell 2(3) Call

Knock-In

+

+Naked Position

Payoff with KIKO contract

950

890

1010

960

Knock-Out

Buy 1 Put

Sell 2(3) Call

Knock-In

+

+Naked Position

Payoff with KIKO contract

KIKO: Knock In Knock Out

Ex. Rate at MAT Option Contract Profit

St ≤890 Terminated ( - )

890<St≤960 Exercised at K=960(Put - Long Position)

(+)

960≤St<1010 Not Exercised(+)

1010≤St Exercised at K=1010(Call - Short Position)

( - )

Exchange Rate

KRW/1USDSource : Paxnet

KIKO: Knock In Knock Out

950890 1010

960

KO KI

KIKO payoff

Short Strangle payoff