Leverage products are options that are securitised, and thus more easily transferable.
How leverage products work
A leverage product gives you the right to purchase (call warrant) or sell (put warrant) an underlying instrument at a previously fixed price on a specific date. The capital invested in a leverage product is lower than that required for a direct investment in the underlying security. For this reason,the participation is disproportionately high compared with the capital invested (the leverage effect).
Leverage products, also called warrants or options, are the ideal investment solution if you
- are looking for a disproportionate participation in the performance of an underlying asset and are prepared to take a higher level of risk;
- desire high profit potential with low capital outlay, or want to hedge against price fluctuations;
- expect a positive (with call warrants) or negative (with put warrants) performance by the underlying security.
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Call-Warrant
If at expiry the underlying security is trading higher than break-even (strike price plus purchase price), you realise a profit, otherwise a loss.
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Put-Warrant
If at expiry the underlying security is trading below break-even (strike price less purchase price), you realise a profit, otherwise a loss.
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