The factor determining higher or lower participation in the performance of the underlying in calculating the amount of the payment.
The amount paid by the issuer of the certificate to the investor upon maturity of the certificate, i. e. at the end of the term.
Physical delivery of the underlying at maturity may be intended depending on the product terms. In this case, a corresponding number of the underlying assets will be transferred to the investor’s securities account on maturity, assuming the conditions for doing so have been met. Physical delivery usually only applies for products based on the performance of shares. Other products are settled in cash at maturity.
Plain vanilla warrant
Plain vanilla warrants (plain vanilla = very simple) grant the right, but not the obligation, to purchase (call warrants) or sell (put warrants) a certain amount of an underlying at a fixed strike price. This can be either at a fixed time (European style) or within a certain period (American style).
The premium or agio (from Greek: allag = exchange) for securities such as bonds is the amount by which their price exceeds the nominal value. The premium is normally expressed as a percentage. Premiums often exist when subscribing to bonds or investment certificates
through bank branches. The premium is also used in valuing warrants. If an investor exercises his theoretical right to purchase the underlying (e. g. a share), the premium or agio denotes the estimated surcharges compared to the direct purchase of an underlying at the stock exchange.
Price in this context refers to the price of securities and other products which is determined on the stock exchange. The price is affected by supply and demand.
Every investment product has in addition to the term sheet also an extensive prospectus. This provides at great length all information about the product’s terms and conditions. This includes risk factors, information about tax and detailed information about the product.
A put option or option to sell grants the seller the right (but not the obligation) to sell or deliver a certain amount of the underlying asset at the fixed strike price on the exercise date. Delivery of the actual underlying is replaced by a cash payment with put warrants. This cash amount
is equal to the difference between the price of the underlying on the exercise date and the strike price.