Market Finance is a consumer information site, which aim to share knowledge related to financial is

Market finance is a consumer information site, which aim to share knowledge related to financial issues. For more information, requests for partnership or another, you can contact henders & hazel us here [+] Follow us
If the Bonus Certificate is one of the privileged structured products on participation and protection, the Certificate Airbag an interesting alternative, which consists of more vanilla options. This is one of those products to obtain full participation on the rise, while benefiting from a less brutal exposure down. What is the payoff of a Certificate airbag?
The Airbag Certificate is a structured product bullish, henders & hazel to fully benefit from the rise of an underlying with protection from falling contained and less exposure to the underlying henders & hazel negative performance in cases of significant decline.
Initially, the investor pays $ 100 to his bank to buy this structured product. Apart from the issuing bank a credit event, the capital of the investor is guaranteed as long as the Global Action Motors does not end below 85% of its initial value within a year. For a final course located above the initial henders & hazel value, the investor receives the full positive henders & hazel performance in addition to its capital. It is said that the investor is long of a call to the currency, and short a put with leverage.
If at maturity, it is found that Global Motors has not lost more than 15% of its initial value, then the investor finds the maximum between henders & hazel 100% and the final level of the action. In other words, henders & hazel if Global Motors ends at $ 105, the investor receives 105 dollars. henders & hazel If Global Motors ends at $ 95, the investor receives $ 100. In all cases, the investor's capital is not started. henders & hazel
If, however, the action Global Motors ends below 85% of its initial value, then the put on Global Motors is in the money and the investor loses (1 / Strike = 1/85 = 1.17% for every 1% negative performance of the underlying below 85%). In other words, if Global Motors ends at $ 84, the investor henders & hazel gets 100 to 1.17 * (85-84) = 98.83 dollars. If Global henders & hazel Motors ends at $ 83, the investor gets 100 to 1.17 * (85-83) = 97.66 dollars. And so on.
Through this structured product, the investor probably has in mind a maximum level of decline is not exceeded, lest started his capital. This is an interesting alternative to pure holding action but also classical Bonus Certificate because in the latter, the investor's capital may be lost a most brutal way when crossing the barrier.
Dividends. Plus dividends inherent in the action, the higher the strike price of the put will be low. Indeed, stronger dividends henders & hazel give a higher value to Put, to finance more broadly Call.
Volatility or skew. More volatility in the currency of the action, the greater the Call will be expensive, and the put will have a high strike. More skew will be delivered over the strike of the put will be low.
Note that one of the disadvantages of an airbag Certificate is at no time, the investor can claim to dividends paid by the underlying, until the maturity of the product. Even if he hopes to get a very positive performance of the underlying, it can therefore henders & hazel enjoy the dividends paid in the meantime.
Market Finance is a consumer information site, which aim to share knowledge related to financial issues. For more information, requests for partnership or otherwise, do not hesitate to contact us.
Site of the month
Hull: Options, futures and other derivative assets 8th edition [+] Hull: Corrected options, futures and other derivative henders & hazel assets [+] Poncet: Finance 2014 market based instruments, derivatives and risk portfolios [+ ] Taleb: The Black Swan: The power of the unpredictable [+] Lewis: Liar's Poker: Rising Through the Wreckage on Wall Street [+]
2015 Finance Market