Boosted forward

A boosted forward allows you to secure a protection rate (less favourable than the benchmark forward rate) while allowing you to benefit from an improved rate, provided that one or the other of the two barriers are not touched during the lifetime of the contract. This improved rate is better than the initial protection rate and better than the benchmark forward rate.

Complexity level :

:

Catégorie : 2 *

Guarenteed protection rate :

Protection rate level against benchmark forward rate :
Less favourable

Amount dealt at expiry :
Same as the notional amount

In what market to use it ?

Participation in a favorable move in spot : No

Hypothesis A : If during the lifetime of the contract, neither of the two barriers have been touched:

 

Scenario A1

At expiry, if the spot rate is less favourable than the improved rate, you can buy the notional amount at improved rate.

 

Scenario A2

At expiry, if the spot rate is better than the improved rate, you must buy the notional amount at improved rate.

 

Hypothesis B : If during the lifetime of the contract, one or other of the barriers have been touched:

 

Scenario B1

At expiry, if the spot rate is less favourable than the protection rate, you can buy the notional amount at protection rate.

 

Scenario B2

At expiry, if the spot rate is better than the protection rate, you must buy the notional amount at protection rate.

Currency cross	EUR / USD
Side	Buy USD
Contract maturity	6 months
Benchmark forward rate	1,1030
Protection rate level	1,0900
Improved rate level	1,1250
Readjusted rate level	N/A
Low barrier level	1,0650
High barrier level	1,1525
Participation rate	N/A
Ratio	1 : 1
Reserve of points	N/A
Type of contract	American
Frequency of fixings	N/A
Frequency of deliveries	N/A
Fixing	10 am, New-York time

Advantages

Disadvantages