Template:Nutshell Equity Derivatives Knock-ins and Knock-outs

1.42. “Knock-in Price” must be specified in the Confirmation.
1.43. “Knock-out Price” must be specified in the Confirmation.
1.44. Knock-in Event.

(a) If “Knock-in Event” applies, a party’s right to exercise an Option under an Option Transaction will be conditional upon the Knock-in Event existing when it is exercised on any Knock-in Determination Day. The parties’ rights and obligations will be altered upon the such exercise as is specified in the Confirmation.

(b) “Knock-in Event” must be specified in the Confirmation. If it is not, but the Confirmation specifies a Knock-in Price for a Knock-in Reference Security that is also the specified Underlier for that Transaction, the Knock-in Event will occur:

(i) If the Knock-in Price on the Trade Date was higher than the initial level set for the Transaction: when the Knock-in Reference Security’s level at the Knock-in Valuation Time on a Knock-in Determination Day at least equals the Knock-in Price; and

(ii) If the Knock-in Price on the Trade Date was lower than the initial level set for the Transaction: when the Knock-in Reference Security‘s level at the Knock-in Valuation Time on a Knock-in Determination Day at most equals the Knock-in Price.

If the parties cannot agree whether a Knock-in Event has occurred, the Calculation Agent will decide.

1.45. Knock-out Event.

(a) If “Knock-out Event” applies, a party’s right to exercise an Option under a Transaction will be conditional upon the Knock-out Event not having occurred on any Knock-out Determination Day as of the time of such exercise, and the parties’ respective rights and obligations will be altered from the occurrence of the Knock-out Event as specified in the Confirmation.

(b) “Knock-out Event” must be specified in the Confirmation. If it is not, but the Confirmation specifies a Knock-out Price for a Knock-out Reference Security that is also the specified Index, Share or Basket for that Transaction, the Knock-out Event will occur:

(i) If the Knock-out Price on the Trade Date was higher than the initial level set for the Transaction: when the level of the Knock-out Reference Security at the Knock-out Valuation Time on any Knock-out Determination Day is at least equal to the Knock-out Price; and

(ii) If the Knock-out Price on the Trade Date was lower than the initial level set for the Transaction: when the level of the Knock-out Reference Security at the Knock-out Valuation Time on any Knock-out Determination Day is equal to or lower than the Knock-out Price.

If the parties cannot agree whether a Knock-out Event has occurred, the Calculation Agent will decide.

1.46. “Knock-in Reference Security” means, where a Knock-in Event applies, the index, share or basket specified as such in the Confirmation or, if not specified, the specified Underlier.
1.47. “Knock-out Reference Security” means, where a Knock-out Event applies, the index, share or basket specified as such in the Confirmation or, if not specified, the specified Underlier.
1.48. “Knock-in Determination Day” means each specified Scheduled Trading Day, unless it is a Disrupted Day due to an event occurring before the Knock-in Valuation Time, in which case it will be the following undisrupted Scheduled Trading Day, though if eight Scheduled Trading Days in a row are Disrupted Days, the eighth one, even though a Disrupted Day, will be the Knock-in Determination Day. In this case the Calculation Agent must determine the level of the Knock-in Reference Security as if it were an Underlier on a disrupted Valuation Date using the method set out in Section 6.6.

Unless otherwise specified the Knock-in Determination Days will be each Scheduled Trading Day from and including the Trade Date to and including the final Valuation Date, the Expiration Date or, if none, the date one Settlement Cycle prior to the final Settlement Date for the Transaction (adjusted as necessary under Sections 3.1(f) and 6.6).
1.49. “Knock-out Determination Day” means each specified Scheduled Trading Day, unless it is a Disrupted Day due to an event occurring before the Knock-out Valuation Time, in which case it will be the following undisrupted Scheduled Trading Day, though if eight Scheduled Trading Days in a row are Disrupted Days, the eighth one, even though a Disrupted Day, will be the Knock-out Determination Day. In this case the Calculation Agent must determine the level of the Knock-out Reference Security as if it were an Underlier on a disrupted Valuation Date using the method set out in Section 6.6.

Unless otherwise specified the Knock-out Determination Days will be each Scheduled Trading Day from and including the Trade Date to and including the final Valuation Date, the Expiration Date or, if none, the date one Settlement Cycle prior to the final Settlement Date for the Transaction (adjusted as necessary under Sections 3.1(f) and 6.6).
1.50. “Knock-in Valuation Time” means the specified time on any Knock-in Determination Day or, if there is none, the Valuation Time specified in the related Confirmation, or if none, the Scheduled Closing Time on the relevant exchange for the Knock-in Reference Security on any Knock-in Determination Day

If an exchange closes early and before the specified Knock-in Valuation Time, the Knock-in Valuation Time will be that actual closing time.
1.51. “Knock-out Valuation Time” means the specified time on any Knock-out Determination Day or, if there is none, the Valuation Time specified in the related Confirmation, or if none, the Scheduled Closing Time on the relevant exchange for the Knock-out Reference Security on any Knock-out Determination Day

If an exchange closes early and before the specified Knock-out Valuation Time, the Knock-out Valuation Time will be that actual closing time.