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
Physical delivery
If physical delivery of the underlying instrument is provided for upon maturity of a structured product, the security holder's account will be credited on the maturity date with an appropriate number of underlying instruments, provided the relevant conditions have been fulfilled. As a general rule, physical delivery is only made for products that are based on shares. Most other products are settled in cash at maturity (cash settlement).
Plain vanilla
The term "plain vanilla" is regularly used in the area of structured products to describe the standard variety of a specific product type. Originally, the expression pertained merely to warrants, but today it is used to describe other product types such as "plain vanilla discounts" (i.e. classic discount certificates).
Power warrants
To calculate the intrinsic value of a power warrant, the difference between the price of the underlying instrument and the strike price has to be squared (i.e. raised to the second power). As a result, these products can under certain circumstance experience an enormous leveraging effect shortly before expiry. The maximum profit, however, is always limited to a fixed amount.
Premium
If you were to buy a leveraged product and immediately exercise the related option right in order to buy (or sell) the underlying instrument, as a general rule this route would be more expensive than if you were to buy (or sell) the underlying security directly in the market. The premium expresses how much more expensive it would be to take the route via a leveraged product, e.g. a warrant. On this Website, the premium is shown in per cent. So that warrants with different terms to expiry can be compared with each other, the premium is also indicated as an annualised amount, i.e. "Premium in % p.a."
Price sensitivity
see Delta
Purchase option
see Call
Put
A put option/warrant confers the right to sell at a specific point in time (European-style) or during a specific period of time (American-style) a specific amount of a specific underlying security at a specific price. Thus an declining price for the underlying instrument causes the value of the option right to increase and hence the option, itself. As a result, the purchaser of a put benefits from the price deterioration of the underlying instrument.

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