Generating returns from put options in structured products
Tim Mortimer from Future Value Consultants explains the rationale and benefits of the inclusion of options when constructing structured products
Most structured products feature components that allow investors to benefit from increases in the value of the underlying asset to which the product is linked. This is generally achieved by a combination of a zero-coupon bond to repay capital plus one or more call options to provide a return generated by appreciation in the asset.
Away from structured products, exchange-traded options have been used for decades by both fund managers and ordinary investors for hedging and speculative purposes
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