A participating forward (ppf) is a synthetic forward where the call and put have the same strike and expiry date but different notionals.
What are its underlying components?
Its underlying components are as follows:
Buy call (put) at strike x with notional y.
Sell put (call) at strike x with notional z.
Why buy a participating forward?
Unlike a regular synthetic forward which guarantees an exchange rate on the expiry date, the different notionals in the call and put in the participating forward let you benefit from a favorable spot move, while insuring you are fully hedged in the event of an adverse spot move.
Pricing a participating forward in SDX Commodities & Energy
You can only automatically enter into a participating forward (ppf) in the Single Option page. To price a participating forward in the Portfolio page, you need to build it manually out of its individual underlying components.