How much a knock-out trade costs you depends on a range of factors.
But in short, you can calculate your opening payment on a 'Call’ trade as:
((Market price - knock-out level) x number of options) + knock-out fee
Or, for ‘Put’ trades:
((Knock-out level - market price) x number of options) + knock-out fee
Bear in mind that while you’ll pay the knock-out fee when you open your trade, you’ll be refunded if you close your trade before it’s knocked out.
Want to know more? Take a look at this in-depth list of all the figures relevant to knock-outs.
| Number | What it is |
| Underlying price | The price that the underlying market – gold or the US Tech 100, for example – is trading at when you open your trade. |
| Knock-out level |
The price at which your trade will be automatically closed if the market reaches it. For ‘Call’ options, it will be below the opening price. For ‘Put’ options, it will be above. You choose the knock-out level before you open your trade. |
| Knock-out distance |
How much one knock-out option costs. Calculated as: Market price - knock-out level (‘Call’ trades) Knock-out level - market price (‘Put’ trades) The spread – our fee for executing your trade, calculated as the difference between the underlying market’s buy and sell prices – is built into the knock-out distance. |
| Size in options |
The number of options you’ve bought for a trade, calculated as: Total knock-out value / knock-out distance |
| Total knock-out value |
The monetary value of the knock-outs you’ve bought for a trade, calculated as: Knock-out distance x size in options |
| Knock-out fee |
The fee you pay if your trade is knocked out, charged to cover the cost of your knock-out level being guaranteed against slippage – much like a guaranteed stop. This is always a percentage of your trade’s full exposure. You can see how much in the ‘Order details’ tab of the deal ticket. You pay it when you open your trade, but you’ll be refunded if you close your trade before it gets knocked out. |
| FX Conversion fee |
If your account’s base currency differs from the currency of the underlying market, an FX conversion will occur when you open and/or close a knock-out trade. This FX conversion is separate from the knock-out fee. The conversion uses the prevailing platform exchange rate at the time of the transaction, in line with how currency conversions work for other instruments. Important: When no FX conversion occurs (for example, a EUR account trading a EUR-denominated index), the KO behaves economically like a CFD, with no FX impact. When an FX conversion does occur, movements in the exchange rate can affect the value of your knock-out trade at opening/ closing, which in turn affect your trade’s final result when converted into your account’s base currency. At Capital.com, no FX conversion markup is charged on knock-out options. This means that while a currency conversion rate may be applied, no additional FX conversion cost is added on top of that rate. |
| Size in cash |
The money you spend to open your trade, and the maximum you stand to lose. Calculated as: Total knock-out value + Knock-out fee We don’t include overnight funding in this calculation, which represents an interest adjustment (which can be positive or negative) rather than a risk. But bear in mind that if you hold a knock-out option overnight, you’ll pay to keep it open. |
| Exposure |
Your trade’s notional size – ie, its total value – in the underlying market. You can calculate exposure as: |
| Overnight funding |
A daily adjustment we make to trades, to cover the cost to us of keeping them open overnight. You can find out more about how overnight funding works for different markets on our fees and charges page. |
Knock-out options are available only for selected countries.