A shark forward that is used for fixing a forward price, while providing exposure to a spot movement in the underlying. This position allows its holder to limit potential losses at a level close to the forward rate/ price.
Practically, it may serve as a hedging instrument. The shark forward plus provides the holder with participation down to a trigger level and guarantees a floor rate which is slightly above the market outright forward rate. If the spot rate at maturity turns out to be less than the trigger level, the holder will not be able to participate in any favorable movement in the spot rate.
By composition, a shark forward plus has in its structure a embedded synthetic forward contract.
