Product Know How

Market expectation

• Rising underlying
• Rising volatility
• Sharply falling underlying possible

Characteristics

• Minimum redemption at expiry equivalent to the capital protection
• Capital protection is defined as a percentage of the nominal (e.g. 100%)
• Capital protection refers to the nominal only, and not to the purchase price
• Value of the product may fall below its capital protection during the lifetime
• Participation in underlying price increase above the strike
• Any payouts attributable to the underlying are used in favour of the strategy

Product components

• Client buys a bond
• Client buys a call option (call long)

Market expectation

• Rising underlying
• Sharply falling underlying possible

Characteristics

• Minimum redemption at expiry equivalent to the capital protection
• Capital protection is defined as a percentage of the nominal (e.g. 100%)
• Capital protection refers to the nominal only, and not to the purchase price
• Value of the product may fall below its capital protection during the lifetime
• Participation in underlying price increase above the strike up to the barrier
• Any payouts attributable to the underlying are used in favour of the strategy
• Possibility of rebate payment once barrier is breached
• Limited upside potential (cap)

Market expectation

• Rising underlying
• Sharply falling underlying possible

Characteristics

• Minimum redemption at expiry equivalent to the capital protection
• Capital protection is defined as a percentage of the nominal (e.g. 100%)
• Capital protection refers to the nominal only, and not to the purchase price
• Value of the product may fall below its capital protection during the lifetime
• Any payouts attributable to the underlying are used in favour of the strategy
• The coupon amount is dependent on the development of the underlying
• Periodic coupon payment is expected
• Limited upside potential (cap)

Market expectation

• Underlying moving sideways or slightly rising
• Falling volatility

Characteristics

• Should the underlying close below the strike on expiry, the underlying and/or a cash amount is redeemed
• Discount Certificates enable investors to acquire the underlying at a lower price
• Smaller risk of loss than with direct investment in the underlying
• Higher discounts can be achieved at greater risk if the product is based on multiple underlyings (multi-asset)
• Any payouts attributable to the underlying are used in favour of the strategy
• Limited upside potential (cap)

Product components

• Client buys a bond
• Client sells a put option (put short)

Market expectation

• Underlying moving sideways or slightly rising
• Falling volatility
• Underlying will not breach barrier during product lifetime

Characteristics

• The maximum redemption amount (Cap) is paid out if the barrier is never breached
• Discount Certificates enable investors to acquire the underlying at a lower price
• If the barrier is breached the product becomes a Discount Certificate
• Since, provided the barrier has not been breached, the nominal is repaid on expiry, the probability of maximum repayment is higher but the discount is smaller
• Smaller risk of loss than with direct investment in the underlying
• Larger discounts or a lower barrier can be achieved at greater risk if the product is based on multiple underlyings (multi-asset)
• Any payouts attributable to the underlying are used in favour of the strategy
• Limited upside potential (cap)

Product components

• Client buys a bond
• Larger discounts or a lower barrier can be achieved at greater risk if the product is based on multiple underlyings (multi-asset)

Market expectation

• Underlying moving sideways or slightly rising
• Falling volatility

Characteristics

• Should the underlying close below the strike on expiry, the underlying and/or a cash amount is redeemed
• Should the underlying close above the Strike at expiry, the nominal plus the coupon is paid at redemption
• The coupon is paid regardless of the underlying development
• Smaller risk of loss than with direct investment in the underlying
• Larger coupons can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
• Any payouts attributable to the underlying are used in favour of the strategy
• Limited upside potential (cap)

Product components

• Client buys a bond
• Client sells a put option (put short)

Market expectation

• Underlying moving sideways or slightly rising
• Falling volatility

Characteristics

• Should the barrier never be breached, the nominal plus coupon is paid at redemption
• If the barrier is breached the product changes into a Reverse Convertible
• Since, provided the barrier has not been breached, the nominal is repaid on expiry, the probability of maximum repayment is higher but the coupon is smaller
• If the barrier is breached the product changes into a Reverse Convertible
• The coupon is paid regardless of the development of the underlying
• Larger coupon payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
• Any payouts attributable to the underlying are used in favour of the strategy
• Limited upside potential (cap)

Product components

• Client buys a bond
• Client sells a Down-and-In put option (Down-and-In put short)

Market expectation

• Underlying moving sideways or slightly rising
• Underlying will not breach barrier during product lifetime

Characteristics

• Should the underlying trade above the Strike on the observation date, an early redemption consisting of nominal plus an additional coupon amount is paid
• Offers the possibility of an early redemption combined with an attractive yield opportunity
• Smaller risk of loss than with direct investment in the underlying
• Any payouts attributable to the underlying are used in favour of the strategy
• Limited upside potential (cap)

Market expectation

• Tracker Certificate (Bull): Rising underlying
• Tracker Certificate (Bear): Falling underlying

Characteristics

• Unlimited participation in development of the underlying
• Reflects underlying price moves 1:1 (adjusted by conversion ratio and any related fees)
• Risk comparable to direct investment in the underlying
• Fees generally in the form of management fees or through the retention of payouts attributable to the underlying during the lifetime of the product

Market expectation

• Rising underlying
• Rising volatility

Characteristics

• Unlimited participation in development of the underlying
• Disproportionate participation (outperformance) in positive performance above the strike
• Reflects underlying price moves 1:1 when below the strike
• Risk comparable to direct investment in the underlying
• Any payouts attributable to the underlying are used in favour of the strategy

Market expectation

• Underlying moving sideways or rising
• Underlying will not breach barrier during product lifetime

Characteristics

• Unlimited participation in development of the underlying
• Minimum redemption is equal to the nominal provided the barrier has not been breached
• Smaller risk of loss than with direct investment in the underlying
• Larger Bonus payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
• Any payouts attributable to the underlying are used in favour of the strategy

Market expectation

• Rising underlying
• Underlying will not breach barrier during product lifetime

Characteristics

• Unlimited participation in development of the underlying
• Minimum redemption is equal to the nominal provided the barrier has not been breached
• Disproportionate participation (outperformance) in positive performance above the strike
• If the barrier is breached the product changes into a Outperformance Certificate
• Smaller risk of loss than with direct investment in the underlying
• Any payouts attributable to the underlying are used in favour of the strategy

Market expectation

• Rising or slightly falling underlying
• Underlying will not breach barrier during product lifetime

Characteristics

• Unlimited participation in development of the underlying
• Minimum redemption is equal to the nominal provided the barrier has not been breached
• Profits possible with rising and falling underlying
• Falling underlying price converts into profit up to the barrier
• If the barrier is breached the product changes into a Tracker Certificate
• Any payouts attributable to the underlying are used in favour of the strategy