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Product Know-How Participation Bonus Certificates
Product Know-How Participation Bonus Certificates
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Bonus Certificates
Participation Products
Participation products generally combine a certain number of defined individual securities (a basket) or an index into a single security. Participation products often fluctuate in a 1:1 relationship to the underlying (delta =1). At maturity, the closing index value or closing price of the basket is paid out. As a rule, participation products offer an opportunity to achieve broad risk diversification even with smaller investment amounts, while also keeping administrative costs low.
Your Market expectation
- Underlying security trades sideways to slightly lower
- Underlying will not hit knock-in during term to maturity
Characteristics
- Unlimited participation in price increase of underlying
- Once knock-in is hit, bonus certificate becomes tracker certificate
- Waiver of current income in favour of strategy
- Lower risk than direct investment as partial protection until knock-in occurs
- If the product is based on a number of underlying (multi-asset), a higher bonus payment or a lower barrier can be achieved but the degree of risk is higher
- Minimum repayment of strike, provided knock-in was not touched
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