Lexicon

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Delta

Delta is one of the dynamic coefficients related to derivatives. The delta of an option/warrant indicates how sharply the value of the security changes when the price of the underlying instrument moves by a certain amount. As a part of this, the exchange ratio must be taken into account if it is not equal to 1. The delta of call options/warrants can lie between 0 and 1. The more the option/warrant is out of the money, the smaller the delta. A delta of 0.5 means that the security would theoretically increase in value by CHF 0.50 if the price of the underlying instrument rose by CHF 1.00. But because delta, as a dynamic coefficient, changes slightly with each tick of the underlying instrument, the reading has to be viewed as a theoretical calculation. The previous example also assumes that all other price-influencing factors for the option (volatility, interest rates, dividends) remain constant. Nonetheless, delta is one of the most important readings for assessing the risk/reward characteristics of options and warrants. Those with a delta close to 0 exhibit practically no response to price movements in the underlying instrument. Moreover, the price of such an option/warrant will be determined to a very high degree by the volatility of the underlying instrument and is therefore very unpredictable. Because a put option/warrant profits from falling prices, its delta is always somewhere between 0 and -1.
Derivatives
Derivatives are financial instruments whose value is dependent upon the price of one or more underlying instruments. Other factors also have an influence on the value of a derivative, such as interest rate fluctuations, the volatility of the underlying instrument and anticipated dividends paid on that instrument. Derivatives exist in securitised and unsecuritised form. The standardised options and futures traded on exchanges such as EUREX are examples of unsecuritised derivatives. Warrants and structured products are classed among the securitised derivatives. The products can be structured in many different ways - everything from capital-guaranteed products to highly speculative instruments is possible. And because derivatives such as put warrants benefit from falling prices, they are indispensable for hedging purposes.
Digital warrant
Digital warrants pay out a fixed amount at maturity if the underlying security lies above or below a predetermined price threshold; otherwise the product expires worthless.
Discount certificate
A discount certificate enables the purchase of an underlying instrument at a reduced price. The discount simultaneously functions as a safety buffer against price declines in the underlying instrument. For that advantage, however, the maximum return on the certificate is limited to a predetermined amount.
Discount warrant
Discount warrants are warrants whose price can never exceed a predetermined cap. In return, they are less expensive than normal uncapped warrants with an identical exercise priced. A discount warrant can only reach its maximum value at the end of its term.

Please wait...
The data push was deactivated due to a timeout. Please click "Refresh page" to continue.