Market uncertainties not only harbor risks - they can also be an opportunity. Learn how a new tracker certificate from Julius Baer uses short-dated put options on major US indices to create a steady income stream for investors aiming to diversify in today’s quickly shifting markets.

Invest defensively for optimal returns

Equity market volatility is expected to persist at elevated levels, punctuated by periodic spikes driven by ongoing uncertainty stemming from political developments and increased downside risks in the US economy. To capitalise on this heightened volatility, investors may consider selling equity put options, which offer attractive premiums. By adopting a defensive approach, this strategy has the potential to yield returns that surpass those of traditional money market investments, making it an attractive option for those seeking to navigate turbulent markets.

New put options strategy for dynamic markets

The issuance of short-dated equity options has experienced remarkable growth over the past five years, with a highly liquid daily market since 2022. As a result, these instruments now comprise approximately 50% of total option trading volumes in the United States. Building on this trend, a novel product is being introduced that offers access to a systematic options strategy focused on the S&P 500 and Nasdaq 100 indices, designed to deliver consistent premium income through the sale of short-dated put options.

Regular cash flow for your portfolio

The very short-term nature of the underlying options and the systematic investment methodology mean that the JB Tracker Certificate on the US Equity Daily Put Selling Index is a unique structure designed to provide an interesting alternative investment stream within a diversified portfolio. Further increasing the appeal of the product, investors receive a fixed quarterly pay-out that translates into an attractive annual yield on the nominal of their investment. The certificate will be listed in the secondary market.

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This content constitutes marketing material and is not the result of independent financial/investment research. It has been produced by Bank Julius Baer & Co. Ltd., Zurich, which is authorised and regulated by the Swiss Financial Market Supervisory Authority FINMA.

This content is intended for information purposes only and does not constitute advice, an offer or an invitation by, or on behalf of, Julius Baer to buy or sell any securities, securities-based derivatives or other products or to participate in any particular trading strategy in any jurisdiction.

Julius Baer does not accept liability for any loss arising from the use of this document.

This content may include figures relating to simulated past performance. Past performance, simulations and performance forecasts are not reliable indicators of future results.

For further details about risks and suitability, as well as important legal information, please consult the following link: IMPORTANT LEGAL INFORMATION

Prominent European banks like BNP Paribas, ING Groep, and Unicredit are trading at attractive valuations and offer generous dividend yields. Julius Baer has put an interesting one-year structured product into subscription that offers exposure to the aforementioned three stocks and capital protection.

While much of the market’s attention has been focused on US financials over the past decade, European banks are now ready to take centre stage. They are not only trading at cheaper valuations but also offer generous dividend yields. Furthermore, technically, the Stoxx Europe 600 Banks Index appears to be breaking out of a 15-year base, and earnings expectations are optimistic. Thus, the prospects for European banks are bright.

Three of the most prominent European banks are BNP Paribas, ING Groep, and Unicredit. All three are currently trading at attractive valuations, despite having reported robust profits for the fourth quarter of 2024.

BNP Paribas boasts a well-diversified business portfolio across attractive markets. Its credible dividend and earnings-per-share growth potential is underpinned by revenue initiatives and a comprehensive cost-savings programme.

ING Groep possesses a solid balance sheet that is characterised by continued improvements in loan loss reserves and a robust equity tier-1 ratio. The group has recently announced plans to distribute excess capital through special dividends and share buy-backs.

Unicredit has improved its earnings visibility following rigorous cost-cutting measures and a comprehensive restructuring programme in recent years. The company’s medium-term strategic objectives prioritise growth and value creation for shareholders.

For more risk-averse investors seeking yield and wanting to lock in returns, we have put an interesting one-year structured product into subscription that offers exposure to the aforementioned three stocks. Besides an attractive guaranteed coupon, the downside risk is reduced by a quarterly lock-in feature that can convert the structure into a 100%-capital-protected product.

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IMPRINT

This content constitutes marketing material and is not the result of independent financial/investment research. It has been produced by Bank Julius Baer & Co. Ltd., Zurich, which is authorised and regulated by the Swiss Financial Market Supervisory Authority FINMA.

This content is intended for information purposes only and does not constitute advice, an offer or an invitation by, or on behalf of, Julius Baer to buy or sell any securities, securities-based derivatives or other products or to participate in any particular trading strategy in any jurisdiction.

Julius Baer does not accept liability for any loss arising from the use of this document.

This content may include figures relating to simulated past performance. Past performance, simulations and performance forecasts are not reliable indicators of future results.

For further details about risks and suitability, as well as important legal information, please consult the following link: IMPORTANT LEGAL INFORMATION

After Trump’s win, our analysts expect higher growth, higher inflation and higher yields. For investors seeking a higher yield than what US Treasuries currently offer, a reverse on the 10-year US Treasury bond may be attractive.

"The US Treasury market has recently experienced height¬ened uncertainty. Initially, Treasury bond yields fell ahead of the start of the US Federal Reserve’s rate-cutting cycle, but they have surged since September in anticipation of a ‘Trump sweep’. Indeed, with Donald Trump becoming the next US president, our analysts expect higher growth, higher inflation, and higher yields. For investors sharing this fundamental outlook and seeking a higher yield than what US Treasuries currently offer, a reverse convertible on the 10-year US Treasury bond may be worth considering.

With this fundamental background in mind, our econo¬mists expect an increase in 10-year US Treasury yields in 3 months and in 12 months. At the same time, the US Federal Reserve is expected to continue on its rate-cut¬ting path, especially since the Trump administration is likely to challenge high interest rates.

In this environment, our structured-product experts have put a reverse convertible on the 10-year US Treasury bond in subscription. This product offers an attractive yield pick-up compared to the underlying 10-year US Treasury bond and a small margin of safety via the strike yield, which is above our expectation for the 10-year US Treasury yield in 12 months’ time. At maturity, if the underlying’s yield remains below the strike yield, investors will receive the initial capital and benefit from a shorter duration compared to holding the underlying bond directly. Alternatively, if the underlying’s yield is above the strike yield and the investor receives physical delivery of the underlying 10-year US Treasury bond, the investor’s port¬folio will be enhanced with a stable income security of the highest quality that could act as a valuable hedge against potential economic downturns. "

For further information about this product click here.

IMPRINT

This content constitutes marketing material and is not the result of independent financial/investment research. It has been produced by Bank Julius Baer & Co. Ltd., Zurich, which is authorised and regulated by the Swiss Financial Market Supervisory Authority FINMA.

This content is intended for information purposes only and does not constitute advice, an offer or an invitation by, or on behalf of, Julius Baer to buy or sell any securities, securities-based derivatives or other products or to participate in any particular trading strategy in any jurisdiction.

Julius Baer does not accept liability for any loss arising from the use of this document.

This content may include figures relating to simulated past performance. Past performance, simulations and performance forecasts are not reliable indicators of future results.

For further details about risks and suitability, as well as important legal information, please consult the following link: IMPORTANT LEGAL INFORMATION