1. Knock-outs are spread bets on a bought option, which means you cannot go short on them. You can buy a bull knock-out if you expect the market to rise, and buy a bear knock-out if you expect the market to fall.
2. Knock-outs are not available for rollover, regardless of any instructions held on your account. All knock-outs settle basis a pre-determined expiry rule. To find out more, take a look at each market’s individual information in the platform.
3. Bets not already closed by you or knocked out expire automatically at the date/time indicated.
4. The knock-out is automatically closed off at 0 if the relevant bid/ask reaches the knock-out level before expiry. The knock-out level chosen by you is guaranteed and therefore protected from slippage.
5. The open price (options premium) of a knock-out is the difference between the underlying IG price and the knock-out level, plus the knock-out premium. The knock-out premium is included in our spread, so you pay it when you buy to open and receive it back if you sell to close before your knock-out level is triggered.
6. The knock-out premium is variable, based on anticipated risk in the underlying market. The premium may increase if market volatility increases, and decrease if market volatility decreases. It is possible the value of the knock-out premium will change while you have an open position. If the premium increases your knock-out will be worth more, and if the premium decreases your knock-out will be worth less.
7. Spreads are subject to variation, especially in volatile market conditions. The spreads are equivalent to underlying IG market spreads. Please see the individual IG underlying market pages (indices, forex and commodities) for further information on how their spread is determined.
8. The margin for 'buying' a knock-out is the opening price (options premium) multiplied by the size of the bet. This is the maximum amount that the bet can lose.
Overnight funding charges
Interest adjustments are calculated as follows:
D = n x C x i / 365
D = daily interest adjustment
n = bet size (Amount per point)
C = underlying index price at 10pm (London time)
i = applicable annual interest rate
Note: The formula uses a 365-day divisor for the FTSE® 100 and other GBP, SGD and ZAR denominated markets, and a 360-day divisor for all others. Positions on the India 50 will have funding attributed based on the prevailing INR (Indian rupee) interest rate, positions on the Brazil 60 will have funding attributed based on the prevailing BRL (Brazilian real) interest rate, positions on the China A50 or China 300 will have funding attributed based on the prevailing CNH (offshore Chinese yuan) interest rate, positions on the South Africa 40 will have funding attributed based on the prevailing ZAR (South African Rand) interest rate and positions on the Malaysia 30 will have funding attributed based on the prevailing MYR (Malaysian ringgit) interest rate, regardless of the currency of your trade.
Interest in respect of long positions is debited from your account, and interest in respect of short positions is either credited to or debited from your account.
Adjustment for dividends
A dividend adjustment is applied to take account of the ex-dividend adjustment to the index. This is the number of points by which the index price must be adjusted downwards to take account of those shares in the index which go ex-dividend at the close of the cash market. We will use the ex-dividend figure estimated by Bloomberg (E&OE), rounded to the tick size we use for that index, to determine what adjustment to apply. In the case of long positions, the dividend adjustment is credited to your account. In the case of short positions, the dividend adjustment is debited from your account. No adjustment is made to your knock-out level in either case.