Knockout Options Market Information

Knockout Options market hours 

Knockout Options follow the same trading hours as their underlying market, which you can find here:

• Forex market hours 
• Indices market hours  
• Commodities market hours 

Full market hours are listed on the market information sheets in the trading platform. Open an account or try a demo account to see more. 

Knockout barrier option types

There are two types of knockout options, UP KOs and DOWN KOs, and you can only hold a buying position.

• If you anticipate a rise in the price of the underlying asset, you’d buy an UP KO position
• If you anticipate a fall in the price of the underlying asset, you’d buy a DOWN KO position

Learn more about what Knockout Options are

Knockout barrier level

You set your Knockout barrier level when opening a position. Each market has a minimum distance away from the underlying City Index price, which you will see on the deal ticket.

If your Knockout level is reached, your position is immediately closed at 0 ensuring that any losses are limited to the amount you were willing to risk when opening the position.

See more about how to trade Knockout Options. 

Knockout Option prices

The price of a Knockout Option is calculated as the distance between the price of the underlying market at the time of placing the trade and the Knockout level.

• For an UP KO trade: City Index underlying Ask price - Knockout level
• For a DOWN KO trade: Knockout level - City Index underlying bid price

Knockout Options expiry dates

Knockout Options have an expiry, which is the last trading day of the month stated in the name of the market.

For example, USD/JPY Feb 23 UP KO would indicate that the Knockout Option expires on the last trading day of February 2023. 

If a position is still open at the time of the market expiry, City Index will automatically close the position at the mid-price of the underlying and you will receive the profit or loss on that position.

Knockout Options costs 

Spreads

Spreads are subject to fluctuation and may change, especially in volatile market conditions. The current spread of a Knockout Option market at a given time can be viewed on the deal ticket in the trading platform. Knockout Option spreads cover the protection of the guaranteed Knockout level.

Maximum risk and margin requirement

The maximum risk is the maximum amount you can lose on the trade, should the market move against you and your Knockout level is reached.

It is calculated as: Knockout option price x trade size.

The margin requirement for a Knockout Option trade – known as the 'premium required' – is calculated as: maximum risk x 1.1. 

The 1.1 multiplier is to comply with regulations.

Overnight financing on Knockout Options

Should you hold a position overnight on either an FX or Index market, there will be an overnight financing adjustment. We use swap points to calculate the daily overnight financing adjustment amount for FX pairs, and use the underlying interbank rate (+/- 2.5%) when calculating financing on indices. Knockout Option positions held on commodities will not be charged overnight financing.

You can find more details on trading costs and charges page. 

Knockout Options dividend adjustments

We periodically apply dividend adjustments to Knockout Options index positions to take the ex-dividend adjustment to the underlying index into account.

There will be no material impact as, depending on the Knockout Option position held, we will either credit or debit accounts for the dividends paid out on the underlying index. 

• For ‘UP KO’ index positions the dividend adjustment will be credited to your account
• For ‘DOWN KO’ index positions, the dividend adjustment will be debited from your account