A Call gives the holder the right (but not the obligation) to buy a specified quantity of the Underlying at the specified Exercise Price. Depending on its style, the Call can be exercised at any time (in the case of American Style Exercise) or only on its Expiration Date (in the case of European Style Exercise). Exercising a Call only makes economic sense if the Spot Price of the Underlying is higher than the Strike Price. Calls contained in Covered Warrants or Structured Investments are usually settled in cash (see Cash Settlement).


A Warrant or Structured Investment which can be redeemed early by the Issuer.

Capped Option

A cap is an upper limit on the extent to which the holder of a Call Option can participate in the difference between the Strike Price and the Spot Price of the Underlying. It is essentially the maximum return that will be paid should the Underlying market rise. Should the Underlying rise above this cap, this has no impact on the investment return.

Capital Protected

See Principal Protected.

Cash Settlement

Obligations arising from the Exercise of an Option are not settled through delivery of the Underlying, but instead are settled through a payment of cash.

Cliquet Option

Also known as a Ratchet Option or a Strike Reset. The Option Strike Price is reset on predetermined dates, usually to lock in any gains made on the Underlying.

Closing Price

See Daily Closing.

Covered Warrant

A Covered Warrant is not usually issued by the company which issues the Underlying shares, but instead is usually issued by a financial institution. The Covered Warrant is said to be “covered” because the Issuer of it covers its obligation to deliver the Underlying (or alternatively to pay a cash amount based on the movement in the Spot Price of the Underlying by holding either the appropriate number of shares or rights to take delivery of the appropriate number of shares. The equity capital of the company which issues the Underlying shares remains unchanged when the Covered Warrant is exercised, because the shares already exist. CitiFirst warrants are Covered Warrants.


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