Equity Blue

In the previous articles it was already mentioned that certificates are compiled of individual components. These components are mainly options. Options are so-called financial derivatives. They represent the right either to buy, or to sell a given amount of an underlying asset (stocks, stock indexes, currencies, interest rates, commodities, etc.) for a given price. This financial derivative is always having its maturity. An option with the right to buy the underlying asset is called “ Call ”, i.e. a call option. An option with the right to sell is called “ Put ”, i.e. a put option. The option’s right can be exercised either anytime within the option’s lifetime, i.e. the option is of a so-called American type, or it can be exercised only in its maturity, i.e. the option is of a so-called European type. For the purposes of constructions of bonus certificates only European type options are used, because the entitlement of bonus pay-out only arises in maturity of a bonus certificate.