Rights under the Option are either activated (“knock-in”) or deactivated (“knock-out”) when the Spot Price of the Underlying reaches a specified level during the Exercise Period.
An Option where the Underlying is a basket of stocks, commodities or indices, etc.
An Option that is exercisable against the best performing of a given number of Underlying shares or indices. For example, an investment which at Maturity offers exposure to the best performing Underlying over the Term of the investment. Also see Worst-of Option.
The price for which a Market Maker or broker is willing to buy a Warrant or Structured Investment.
See Digital Option.
One of the best known mathematical models for calculating the value of a Warrant or Option.
A bond is a debt instrument that is usually issued by a government or a corporate entity. Most bonds have a fixed Maturity and offer a fixed coupon or interest payment. Bonds are often used in creating Structured Investments (typically Zero-Coupon Bonds or medium term notes).
A Bonus Certificate gives the investor the potential to receive an attractive Bonus Payment in slightly falling to flat markets, without having to forego the upside potential, as long as during the life of the certificate the underlying never trades at or below the lower Barrier. In a rising market, you will receive the performance of the underlying on a one-to-one basis.
The level that the Spot Price of the Underlying must reach so that the holder of an Option or a Warrant does not suffer a loss. As at the Expiration Date, the Break-even Price of a Call is equal to its Strike Price, and the Break-even Price of a Put is equal to the Strike Price minus the price paid to acquire the Option or the Warrant.