If at expiry the underlying security is trading below break-even (strike price less purchase price), you realise a profit, otherwise a loss.
How capital protection products work
The capital protection level is often fixed at 100%, but can also be higher or lower. In most cases the capital protection only applies at expiry. During the life of the product, interest rates also have an impact on the value of the product. Rising interest rates have a negative impact on the price.
With capital protection products, the participation rate plays an important role in addition to the capital protection level. The participation rate determines the extent to which you profit from any rise in price of the underlying security. As a rule, a lower capital protection level means a higher participation. You can further improve the participation if you agree to forgo any gains above a certain level (capital protection with cap).
Capital protection products are the ideal investment solution if you
- have low to medium risk tolerance;
- are looking to hedge against price setbacks;
- expect a positive performance by the underlying security and want to profit from it.
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95 % Capital protection
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Capital protection with cap
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