Derivatives

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BNP Switzerland Advertising: 325% Participation on Dividendstocks (Dividend Pearls)

BNP_Outperformance two pager v5 – DE This ad was published on the cash.ch website today. The ad leads to the website http://www.bnpparibasmarkets.ch/DE/Showpage.aspx?pageID=601   What surprised me was this payoff diagramm published in the two-pager for the 325% product. What the investor needs to understand with this type of product: BNP will use the dividends to buy calls. This means that in a down market or one with sinking volatility, the…

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Conduct Problems in Advertising Structured Products in Switzerland

In connection with my recent series of posts highlighting ads by Credit Suisse (Ad 1, Ad 2), Vontobel (Ad 3), Deutsche Bank, Notenstein (Raiffeisen) (Ad 4) pushing structured products such as barrier reverse convertibles, bonus certificates, it was interesting to read this comment from the UK’s Financial Conduct Authority: Clive Adamson, director of supervision at the regulator, said: “It is particularly important in this sector that advertisements for financial products…


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Bonus Certificate CH0239961847 – Advertising on Swiss Newspaper Websites

The latest in the Credit Suisse series of ads for structured products (complex products). The two screenshots below are what you would see just above the headlines on the newspaper website: Who are bonus certificates for? Market Expectation Underlying moving sideways or rising Underlying will not breach barrier during product lifetime 23996184_termsheet_EN   If no Barrier Event has occurred, a cash amount equal to the Denomination multiplied by the greater of (a)…


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Non-Ethical Behaviour in Advertising Structured Products

I came across this ad (see below) in the Frankfurter Allgemeine Zeitung today. Vontobel pushing equity linked bonds aka reverse convertible bonds (Aktienanleihen) with coupons of 7% to 8.5%. Most people, who have no advisor protecting their interests, will base their investment decision on the information given in this ad. In this case there is no visual or written information regarding the risk (except the general risk of loss if the…


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Credit Suisse – Barrier Reverse Convertibles

Advertising on the website of NZZ.ch for the Barrier Reverse Convertibles of Credit suisse on Danone, L’Oréal and Sanofi in EURO: Further information taken from website of Credit Suisse (the flash banner, of which I took screenshots, above linked to it) This is my graphical way of showing this product:   “If the value of the Underlyings decreases, the Final Redemption Amount may be substantially lower than the Issue Price….




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Option Strategies – Overview – Graphs

This overview of option strategies can come in handy when discussing with clients or prospects how to best capitalise on their / my views for index or single equity levels and other instruments. Options-Strategies-Overview


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Structured Products and their Importance to Universal Banks’ Profits

The data below is from a large universal bank in Switzerland. It shows that close to a quarter of the entire banks trading profits come from structured products. The fact they make 300% more money with structured products vs equity trading and equity derivatives tells you a lot about margins and how widespread the use of structured products has become. From a client perspective investing in these instruments this can’t…


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Cost (Issuer Margin) of Derivative Products according to the German Derivatives Association

Issuer margin by product: [table] product, highest margin in % per year, average Options,4.14,1.96 Capital Protection,1.35,0.73 Express-Certificates,2.02,0.66 Convertible Bonds,3.50,0.65 Bonus-Certificates,2.84,0.52 Discount-Certificates,1.23,0.50 Structured Bonds,0.39,0.14 [/table] source: Deutscher Derivate Verband (DDV) Study was commissioned by the DDV and presented by Lutz Johanning from the WHU-Otto-Beisheim School of Manangement in Valendar. He is chairholder of the Finance and Accounting Group, Empirical Market Research there. Here are the main findings in condensed form: