---
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/100000000857512.md"
description: "There's a common misconception that all DLCs trigger the airbag at a 20% adverse move in the underlying. That's incorrect.20% is the theoretical wipeout level for a 5x DLC.Formula: 100% / Leverage Factor = Wipeout Gap. For 5x, that's 20%.Without an airbag, a 20% adverse move would bring a 5x DLC to zero. That's why the airbag trigger is set LOWER - to leave a buffer before zero.Actual SGX Airbag Triggers [Adverse move in underlying]:5x Index DLC: 10%5x Single Stock DLC: 15%3x Index DLC: 20%  The trigger only activates when the underlying moves AGAINST your DLC direction. E.g. underlying falls for a Long DLC, rises for a Short DLC.How the Airbag Actually Works:When the trigger is hit:1. Suspension: Issuer requests SGX to suspend trading of the DLC for ∼30 mins. This consists of 15-min Observation Period + 15-min Reset Period + exchange approval time.2. New Observed Level (NOL): During the 15-min Observation Period, the system captures the WORST level of the underlying.• For Long DLC = Lowest price in that window • For Short DLC = Highest price in that window 3. Reset & Resume: After trading resumes, all future performance is calculated based on the NOL, not the previous close. Your exposure is reduced, which also means it significantly reduces your ability to recoup losses even if the underlying bounces back.Critical Risk to Understand:The airbag SLOWS the loss, it does NOT guarantee you won't go to zero.If the underlying moves another 20% against you during the Observation Period itself (for a 5x DLC), the DLC can still go to zero. This can also happen on an overnight gap.For example, for a 5x Long DLC, the DLC would lose its entire value should the underlying fall by 20% or more overnight or within the 15-min Observation Period.  Trade with risk management. DLCs are designed for short-term tactical trading."
datetime: "2026-08-17T12:24:23.000Z"
locales:
  - [en](https://longbridge.com/en/topics/100000000857512.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/100000000857512.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/100000000857512.md)
author: "[Legengar](https://longbridge.com/en/profiles/14739936.md)"
generator: "portal-rs"
---

# There's a common misconception that all DLCs trigg…


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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**