Template:M summ Equity Derivatives 1.44

If you have forgotten what it is like to have a tension headache, and for some reason feel like being reminded, the sterling work of ISDA’s crack drafting squad™ on Section 1.44 might just be the aneurysm you are looking for.

It is basically simple but good GOD they make a meal of it. If you stipulate a Knock-In Price below your strike price, if the Underlier falls far enough to hit that price, or go below it, you have a Knock-In Event. If your Knock-In Price is above your initial strike, then the Underlier has to go up to hit it. Whether you have hit it is measured at specified certain times on certain dates.

Can we envisage a circumstance in which the Knock-In Reference Security is not the Underlier? Well, I can’t but I am sure someone at Goldman could think of one.