| CFD | Knock-out | |
| What is it? | A contract between you and us, to exchange the difference in price of a market between the open and close of a trade. | An option, which is a type of derivative contract enabling you to trade on the price of an underlying market. |
| How does market movement affect its value? | A CFD’s value moves with the underlying market. Because you only pay a portion of the trade’s full value upfront (margin), even small market movements can have a proportionally larger impact – positive or negative – on your result. | A knock-out’s value moves with the underlying market. How much your trade’s value is affected by that movement depends on how many options you buy, and where you place your knock-out level. |
| What markets can I trade? |
Commodities Indices Crypto Shares Forex ETFs Bonds Futures Interest rates |
Commodities Indices Crypto Shares Forex ETFs Bonds Interest rates |
| Can I trade on falling markets? | Yes. You can buy to open if you think a market will rise, and sell to open if you think a market will fall. | Yes. You can buy a 'Call’ knock-out if you think a market will rise, or buy a ‘Put’ knock-out if you think a market will fall. |
| What is the maximum risk when trading CFDs or knock-outs? |
For standard CFDs your maximum risk is technically the entire balance of your account. However, you can protect against risk by adding guaranteed stops, stop-losses (not guaranteed against slippage) and take-profit orders. You’ll be charged if your guaranteed stop is hit. |
For knock-outs, the risk is predetermined. Risk management is built in. You’ll choose a knock-out level for each trade before you open. If the market hits that level, your trade will be closed automatically – your maximum loss is the full Option Price (including KO Fee), plus any negative overnight adjustments if applicable. |
| Can I use margin? |
Yes. When you open a trade, you’ll only put up a fraction of its full value – known as margin – to open the position. This means you can gain exposure to a large market value with a smaller initial outlay. You can adjust your account’s margin settings within the limits set by regulators by going to ‘My accounts’ > ‘Trade options’ > ‘Leverage’. Remember that trading on margin can amplify both potential gains and losses. |
No. Knock-outs are non-margin products. Instead, you pay the full Option Price upfront, which defines the most you can lose. Moving your knock-out level closer to the market price lowers your upfront payment and increases your exposure relative to your spend. Setting it further away raises your upfront cost but reduces the chance of being knocked out. Because knock-outs are non-margin instruments, Parts 11 and 12 of the Capital Com SV Terms do not apply. Please refer to Appendix A of the T&Cs for knock-outs. |
| Will I have to pay any fees? |
Yes. You’ll always pay the spread, our charge for executing your trade. Depending on your trade, you may pay other fees, like guaranteed stop premiums or overnight funding admin fees. |
Yes. You’ll always pay the spread, our charge for executing your trade. If (and only if) your trade is knocked out, you’ll also pay the knock-out fee – our charge for protecting the trade against slippage. This is 0.1% of your exposure. Depending on your trade, you may pay other fees, like overnight funding admin fees. |
| Currency conversion | P/L is converted at close to your account’s base currency if it differs from the market currency. An FX conversion markup may apply. |
The Option Price is converted at both open and close if your account’s base currency differs from the market currency. Conversion takes place using the prevailing platform exchange rate when the trade is opened and closed. Some brokers add a separate FX conversion markup on top of the exchange rate. For knock-out options at Capital.com, no FX conversion markup currently applies. Currency conversion applies only to the KO value of the position. The KO fee is shown separately in your reports and is returned in full if your trade does not get knocked out. |
| Can I open opposing trades on the same market at the same time? |
Yes. To do this, you’ll need to turn on hedging mode. Log in and go to: ‘My accounts’ > ‘Trade options’ > ‘Hedging mode’. |
Yes. You can buy both a Call and a Put knock-out on the same market, and the two positions won’t cancel each other out. Knock-outs always operate in hedging mode, meaning you can hold opposite positions on the same market at any time, regardless of your account setting. |
| Is there an expiry date? | No. | Yes. A knock-out expires one year after opening. If the expiry date is on a non-business day, the knock-out will expire on the next business day. |
Knock-out options are available only for selected countries.