Knock Out DCD

Knock Out DCD

1. Customer; sells the right of seling or buying in any currency determined, a specific term with certain price to the bank. In exchange gains option premium. If the exchange rate reaches the determined barrier between the term the optiın will be cancelled and will expire.

2. Customer will gain deposit interest between the option terms.

Features

  • Customer gains much more by taking exchange rate risk.
  • This product is not a capital protected, the risk of the transaction is changed according to the exchange rates movements at the market.
  • If the exchange rate reaches the determined barrier between the term the option will be cancelled and will expire.
  • The amount can not be used before the maturity date.
  • Applicable in all currency pairs. (USD/TRY, EUR/TRY, EUR/USD,.....)
  • This product may be advisable for investors who have experience in derivative transactions.

Why Knock Out DCD? Who can benefit from?

  • This products is for customer who thinks deposit interest is not enough and want to gain extra funds in addition to it.
  • To the customers who follows the foreign exchange market and wants to gain the future foreign exchange expectations.

Example Transaction :

This is suitable for the customers that think the USD/TL exchange rate would not be higher or to the customers who wants to exchange their foreign exchange to TL from a suitable level.

AmountUSD 1,000,000
Term1 year
Spot Market RateUSD/TL 1,9500
Agreement Rate2,1000
Knock Out Rate1,9250
Option PrimiumUSD 15,000

If USD/TL exchange rate reaches 1,9250 between the term option will be cancelled. This way customer does not have any risk no longer and does not have to wait until maturity date. However, in every condition our customers receives the option premium of 15,000 USD.

  •  If the USD/TL exchange rate does not reach the 1,9250 level between the terms, arises the possibility of two different results as follows.

These possibilities are realized if;The bank uses the rights owned according to the primium that is paid

  • If the USD/TL exchange rate stays under the level of 2,100 at the end of the year (maturity date); The bank does not use the option rights and the customer's funds stays as 1,000,000 USD. Customer gains 15,000 USD premium.
  • If the USD/TL exchange rate stays on top of the level of 2,100 at the end of the year (maturity date); The bank uses the option rights owned according to the primium that is paid and will exchange the dolar of the customer with USD/TL 2,1000 exchange rate and 2,100,000 will be in the account. Customer gets the 15,000 USD in any case.