Term sheet


A term sheet is a document summarising the terms and conditions of a warrant or certificate. It includes the most important details, such as the ISIN, the product, the issue price, the term and other product-specific features.


Theta


The dynamic indicator Theta measures an approximation of the daily rate of loss of an option’s value when all other variables remain constant. A Theta of 0.01 thus means that an option converted on the basis of a 1:1 ratio will lose one cent in value per day if all other parameters remain unchanged. Theta usually relates to one day or one week. The time
value of an option falls as it approaches expiry. Particularly with warrants which are out of the moneyor at the money, Theta increases sharply towards expiry. The value of these securities is determined almost entirely by their time value. At expiry, Theta finally reaches zero.


Time value


The difference between the warrant’s price and its intrinsic value. The less time there is remaining until the warrant’s expiry and the lower the volatility of the underlying, the lower the time value is. The time value declines disproportionally as the warrant’s expiry draws closer. On the expiry date, the warrant’s time value is zero. The warrant’s value is then equal to its intrinsic value.


Trading hours


Trading hours refer to the period during which a stock exchange is open for trading each trading day.


Trailing stop buy


With a trailing stop buy, the stop buy limit is automatically adjusted when prices are falling. With this form of buy order, the order trails the falling price at a fixed distance. If the limit is reached or exceeded, the buy order is executed. Thus there is no need for the investor to constantly track the trading and to adjust the stop buy order accroding to the share performance. If the price falls, the limit remains unchanged and is not adjusted.


Trailing stop loss


With a trailing stop loss, the stop loss limit is automatically adjusted when prices are rising. With this form of sell order, the order trails the rising price at a fixed distance. If the price reaches or falls below the limit, the sell order is executed. Thus there is no need for the investor to constantly track the trading and to adjust the stop loss order according to the share performance. If the price rises, the limit remains unchanged and is not adjusted.

 

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