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knock outs


Guest Bws

Question

If the market goes against me on the new knock outs will extra funds be required to cover the fall or is the initial margin all that is required ?

Also at the end of the set time what if anything is returned to my account if 

1 the position is in positive territory

2 the position is in negative territory 

 

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5 answers to this question

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Guest SteveIG

KO's are not subject to the 50% close out rule, and therefore if the market moves against you you may have to deposit more funds to cover your position. (You're account is still covered by the negative balance protection rule though). 

If the position closes in a positive your margin is freed up and you take your profit, whilst if it settles against you your margin is freed up and any losses are deducted. 

Further basic info

You buy a bull knock-out if you believe the price of the underlying market will rise. The knock-out levels available will be below the current market price.

You buy a bear knock-out if you believe the price of the underlying market will fall.  The knock-out levels available will be above the current market price. 

The maximum loss on a knock-out is the premium (price of the option), plus the knock-out premium, payable only if your position is knocked-out. 

Each Knock-out has an expiry of 12 months, but you can sell out of your position before the expiry.

The Knock-out will settle basis IG’s underlying bid/offer price and you can calculate the corresponding profit or loss just as you would with any other spreadbet or CFD trade:

(Difference between opening and closing price) x (amount/point)

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So with Knock-outs there are...No Stop Entries or Orders available?

No "Stops" that I can actively move to protect a winning trade?

In other words when I activate a trade or this KO option, I will become a screen slave just in case the position starts to go sour? 

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On 8/10/2018 at 8:16 PM, Guest Joe said:

So with Knock-outs there are...No Stop Entries or Orders available?

No "Stops" that I can actively move to protect a winning trade?

In other words when I activate a trade or this KO option, I will become a screen slave just in case the position starts to go sour? 

Hi Joe - please feel free to login (top right) if you have an IG account so you are notified of any replies. 

When you open a KO, you have to input a KO Level in the first field - this is basically your stop level and it is guaranteed irrespective of market movements, liquidity or gaps during closed periods. As noted you can't currently move these - this is because this is basically an option (with a delta one movement) so you must think of this as your strike price. Going forwards we will be looking to add the option to have another moveable Non-GStop to the position which can sit before the KO Level.

As stated you can't set a working order to open a trade. 

Please note that this is the first iteration of this completely new asset asset type and we are looking for continued feedback to further refine the offering. 

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Guest typer77

It looks like for the current KO options, the premium - intrinsic is still 2 points + around 3points spread for HS50. For the 2points that's more than what it would cost me to put a stop in... just curious if there's any more advantages to using the KO vs stop we input ourselves. thanks.

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On 29/03/2019 at 11:37, typer77 said:

It looks like for the current KO options, the premium - intrinsic is still 2 points + around 3points spread for HS50. For the 2points that's more than what it would cost me to put a stop in... just curious if there's any more advantages to using the KO vs stop we input ourselves. thanks.

KOs are a 'guaranteed' stop, very similar to what youd see buying an option. I.e. guarateed you can't lose more than that initial premium.

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