Trade of the month: Reverse convertibles
Reverse convertibles are popular in most structured products markets and are especially appealing during times of low, risk-free interest rates and high volatility. This is because the core idea of such products is to boost a risk-free rate of interest by selling a put option linked to some underlying asset in order to generate premium and boost yield. If the underlying declines (according to some given definition) then the investor must pay out on the put, which results in the capital repaid
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