Knock-In Reverse Convertible

Mutual Funds
Systematic Investment Plan
June 17, 2022
Accounting
Relief Value
June 18, 2022

A reverse convertible that involves writing a down-and-in put option by the investor (holder) to the issuer, in order to enhance the coupon. The investor, as seller of the put, will have additional protection against downside risk, and hence will receive a slightly lower coupon than that of a vanilla reverse convertible. However, the coupon will be enhanced by writing the down-and-in put.

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