Equity Blue

In the last week of February the stock index EURO STOXX 50 experienced again a rather strong price oscillation. The index was at its low in the middle of the week. The week’s difference between the highest and the lowest value of the index was at least 120 points, which is roughly 4 % (see the graph nr. 1). The index’s value oscillation has, of course, influenced the price development of our exemplary certificates. While the beginning and the end of the week were particularly favorable for the certificate focusing on growth of the value of the index, the mid of the week was very interesting for the reverse certificate. Graph Nr. 1: Price development of the stock index  EURO STOXX 50 from 04.01.2016 until 26.02.2016 The Cap Bonus Certificate on Index EURO STOXX 50 with the ISIN DE000GT6YD37 was closing at the price of EUR 80.65 on February 26, which is 3.5 % higher than on Friday, February 19. The price development of the certificate can be best described by viewing t...

Similarly as in January, significant market volatility has continued to be present in the capital markets in February too. One of the broadly used indicators of market volatility is the VIX Index, which is measuring the price oscillation of the American stock index S&P 500. A brief view of the graph below, which shows the curve of the VIX index for the recent twelve months, suggests that the market volatility tends to be growing from November 2015, i.e. the curve creates bigger slopes, while it’s more flat during low volatility periods. How does the increased volatility of recent weeks influence prices of certificates? Graph Nr. 1: Index VIX In the previous article the first exemplary Cap Bonus Certificate on index EURO STOXX 50 with the ISIN DE000GT6YD37 was shown. Let’s have a look how the value of this certificate evolved for the last two weeks. As it was already mentioned in many of the previous articles, the price of a certificate derives mainly from the evolution of...