A derivative or other leveraged product is a financial instrument whose price depends on the performance of an underlying asset. Underlyings can be, for example, stocks, bonds, interest rates, commodities or foreign currency.
These products can be roughly divided into leverage and investment products.
With leveraged products it is possible to profit disproportionately from the price movements of the underlying assets even with small investment amounts. However, high losses are possible due to the leverage effect. In the worst case, a total loss can occur.
Very high risk of loss
Knock-out products enable investors to participate disproportionately in rising (long) and falling (short) prices of an underlying asset. Positive and negative movements of the underlying are tracked 1:1. Example: If the price of the underlying instrument increases by one euro, the knock-out increases by one euro as well. Due to the significantly lower purchase price of a knock-out product compared to the underlying, a leverage effect is created.
By introducing a knock-out barrier, the influence of volatility is largely eliminated. As soon as the price of the underlying reaches the knock-out barrier, investors realise a total loss of the capital invested.
On average, 7 out of 10 retail investors incur losses when trading turbo certificates. Turbo certificates are high-risk products and are not suitable for long-term investment strategies.
High risk of loss
Warrants enable disproportionate participation in rising (call) and falling (put) prices of an underlying asset through a leverage function. With warrants, investors can speculate on (sharply) rising or (sharply) falling prices of the underlying asset.
The price of the warrant is not only influenced by the movement of the underlying asset, but also by the volatility of the underlying asset or the remaining term to maturity of the warrant. If the price of the underlying asset is below (call) or above (put) the strike price at maturity, investors realise a total loss.
High risk of loss
Factor certificates offer the opportunity to participate in price increases (long) or price decreases (short) of an underlying asset with a certain leverage that is constant on each trading day. As a rule, they have no expiry date, strike price or knock-out barrier.
The factor defines the leverage with which the factor certificate tracks the daily percentage price change of the underlying asset. Due to the daily adjustment of the leverage, a path dependency arises that can lead to losses even in volatile sideways movements. A total loss of the invested capital is possible, especially if the value of the underlying asset is subject to high volatility.
High risk of loss
Discount warrants make it possible to participate disproportionately in rising (call) or falling (put) prices of an underlying asset within a certain price range.
Discount warrants are considerably cheaper than classic warrants - in return for this discount, investors accept a cap (highest price) as payoff limitation.
If the price of the underlying asset is above (call) or below (put) the strike price at expiry, investors participate up to the cap. Beyond the cap, they no longer profit from a further price development.
High risk of loss
Inline warrants enable investors to profit from sideways movements of the underlying. Warrants of this type pay a fixed amount at expiry if the upper and lower barriers have neither been touched nor exceeded or fallen below during the entire life of the product.
If one of the barriers is touched or breached, investors realise a total loss.
High risk of loss
Leveraged ETPs (such as ETFs) offer investors the opportunity to track the price movement of an underlying asset (e.g., an index) with a fixed, daily leverage (e.g., x2 or x3). The crucial difference is that the leverage is rebalanced daily. This means the product's performance over longer periods can significantly deviate from the performance of the underlying asset multiplied by the stated leverage. They are therefore primarily suitable for very short-term speculation.
With investment products it is possible to improve the risk-reward profile of your portfolio. Products of this type are usually not leveraged and have a similar or often lower risk than the underlying.
Moderate risk of loss
Discount certificates allow investors to invest in the underlying asset at a discount to the current price. The discount enables investors to achieve a positive return even if prices move sideways or fall slightly. However, the maximum profit of the certificate is limited by a maximum amount and investors forego possible dividends.
Moderate risk of loss
Bonus certificates allow investors to achieve a positive return even if prices move sideways. A bonus certificate pays back a bonus amount at the end of the term if the price of the underlying asset has not touched or fallen below a certain barrier during the entire life of the product. Investors do not receive any dividend payments.
After reaching the barrier, investors participate at a ratio of 1:1 to the underlying.
Moderate risk of loss
Reverse bonus certificates make it possible to profit from falling prices of an underlying asset. A reverse bonus certificate pays back a bonus amount at the expiry if a certain barrier has not been touched or exceeded by the price of the underlying asset during the life of the product.
After reaching the barrier, the certificate tracks the inverted price movements of the underlying (positive for falling prices, negative for rising prices).
Moderate risk of loss
Index certificates allow you to participate in the price movement of an index at a ratio of 1:1. Since an index usually combines several individual securities, investors can use index certificates to make diversified investments in a particular asset class, sector or region.
Investing involves risks. Derivatives and Cryptocurrencies entail high risks. Private Equity is subject to liquidity restrictions, consider specific product information. The value of your investment may fall or rise. Losses of the capital invested may occur. Past performance offers no reliable indication of future performance. Please refer to our risk information.
*2.60% interest p.a. on unlimited Overnight savings, clearing accounts as per interest overview. Interest variable, for instance based on market rates. With PRIME+, up to 5 x €100,000 statutory deposit guarantee by allocating across up to 5 banks. Without PRIME+, allocation across banks with statutory deposit guarantee or money market funds where European investor protection rules (UCITS) apply, each possible as sole safekeeping method. Fixed-term savings with guaranteed interest on unlimited cash allocated across one or more banks with €100,000 statutory deposit guarantee. Additional voluntary deposit guarantee possible. Allocations are variable, for instance based on capacities and conditions.
Up to €250,000. Variable borrowing rate, charged quarterly. Credit offer by Scalable Capital Bank, Munich. Note the credit-financed investment risks and credit requirements.
Taxes
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