What are Structured Derivatives

Complex payouts linked to Equities and Fx

Structured Derivatives (like Accumulators and Decumulators) are very popular with investors and are offered by almost all Private Banks. These are most often in Note format, they are increasingly also executed in OTC format.

A typical transaction has a payoff linked to a particular stock or Fx pair A typical transaction would be like

• 1 year maturity, with daily observations which are settled once a month. The trade knocks out in case Netflix (NFLX_US) ever trades above 650
• For every day NFLX_US (current price 541.15) closed below 595.00, the investor buys 20 shares at a price of 500 (i.e. significantly better than current market price).
• For every day Netflix price closes below 500, the investor buys 40 shares (i.e. double the downside)

For each transaction, the Investor gets a termsheet from the bank (sample on the execution of every trade. A sample termsheet can be downloaded from here