A financial product with a limited maturity whose risk profile is similar to that of an exposure to the underlying security (shares, commodities, index). However, the corresponding certificate is based on a fixed strike price. – If, at the end of the term, the price of the underlying (reference base) is higher than the agreed strike price, the investor receives the difference between the current price and the contractual strike price, multiplied by a participation factor greater than one. – However, if the strike price is below the agreed limit, then the investor receives the full agreed strike price. – There are numerous variants of this basic model; Protect Outperformance Certificates have become particularly popular. Here, a barrier is built in below the strike price, which the underlying asset may not touch during the entire term of the contract. If this occurs, however, the investor receives his invested capital back on the maturity date. For this benefit, however, the investor must accept a lower participation factor. – See airbag certificate, basket certificate, bonus certificate, discount certificate, express certificate, guarantee certificate, leverage certificate, participation certificate, quanto, reverse certificate, sprint certificate, strategy certificate, theme certificate, twin-win certificate.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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