Discount certificates make it possible to buy an underlying instrument for less than its current market price. However, the maximum payback on a discount certificate is limited to a predetermined amount (cap). The lower the cap, the greater the discount. Discount certificates have usually maturities standing between one to three years. The payout is as follows: If the underlying level is at or above the cap, the product will pay an amount reflected by the cap. If the price of the underlying stock is below the cap the product will pay a cash settlement reflecting the value of the underlying instrument. Neglecting credit risk considerations, by holding a discount certificate till maturity, an investor will incur a loss only if the price of the underlying instrument has fallen so far that the discount has been totally eroded. In essence, the discount works like a cushion against price declines in the underlying instrument: any loss derived by a discount certificate, will be less than the loss derived by investing directly in the underlying instrument

Customizables Attributes

Contract Terms

First Observation (Strike Date) Date at which the underlying is observed and reference levels are set.
Last Observation The last observation date at which the underlying is observed. Product maturity is set a number of days following this date as specified by Days To Payout.
Days to payout Number of working days to the payment date from an Observation Date.
Issuer The name of entity issuing the security.
Issue Price Price at which the contract is issued at Issue Date.
Payout Currency The currency in which the contract pays.
Underlying Basket of indices or equities whose performance enters in the product's payout.
Cap Level Cap at which the final payout is subject. The cap is expressed in relationship to the strike level.
Parity Scaling factor for the strike price used to calculate the discount level
Custom Strike Levels Enter here the underlying fixing levels if different from underlying market close prices at strike date. Leave this field empty to use the closing market prices at the strike date,