# Does a barrier breach in a geared put structured note result in greater losses for the investor vs a plain knock in barrier?

I understand how knock in barriers work. But what do geared put in a structured note mean? My understanding is in a geared put vs a regular knock in barrier, the loss for the investor is higher if the barrier is breached as the gearing quotient comes into play. So for example @ a 50% barrier, in a geared put option, the investor loss would double in case of a barrier breach? Can someone confirm this?

• What have you tried yourself to answer this question? – Bob Jansen Oct 28 '20 at 8:18
• My understanding is that once the barrier is breached in note with a geared put, the investor ends up paying more than a regular knock in option as the loss participation is geared. So for example at a 50% barrier breach the loss participation rate wud be double? – Girish Oct 28 '20 at 10:16
• Thank you for showing some effort. – Bob Jansen Oct 28 '20 at 11:06
• "Gearing" is a pretty generic term that means leverage, a multiplicative factor to some quantity, so I don't believe "geared put" is a standard term with unambiguous meaning, though some people might interpret it your way. For example, in this article, the author defines a geared put in a way which matches your question, namely the loss once the barrier $B$ has been breached is $100\%/B$, which for $B=50\%$ does give a gearing of 2 as in your example. – Daneel Olivaw Oct 28 '20 at 13:04
• Note that in the example above, it was arbitrarily chosen that the gearing or leverage factor $g$ is equal to $100\%/B$, but it could also have been set arbitrarily to $g=3$, $g=B/100\%$ or whatever. A gearing is merely a multiplicative factor. – Daneel Olivaw Oct 28 '20 at 13:09