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Tutorial: Turbo long/short

What are Turbo long/short?

Turbo long/short allow you to benefit from market fluctuations in both ways. Turbo long benefit from rising prices, Turbo short from falling ones. Every incremental movement in the price of the underlying may lead to disproportionately high returns due to the leverage effect. However, while the unlimited upward potential is the upside of this particular product, the risk of losing the entire capital invested if the set barrier has been broken is its downside. In the case of Turbo long the barrier is set below the current price of the underlying. Turbo short will have the barrier set above the current price of the underlying. There are turbo products with a fixed maturity date, and turbo products with no fixed maturity date.

How do Turbo long/short work?

What applies to share, index, commodity Turbo open end certificates:
• If the price of the underlying asset rises, the price of TURBO LONG/SHORT rises/falls depending on the size of the leverage.
• If at the time of the purchase of the TURBO LONG certificate the leverage is 10 and the underlying asset increases by 1%, the price of the certificate in the currency of the underlying asset increases by about 10%.
• TURBO LONG/SHORT certificates have a fixed realisation price (so-called Strike value) and knock-out barrier (long/short). The Strike value and knock-out barrier are continuously regulated by daily financing costs. The price of the certificate does not contain the financing costs.
• The actual value of the certificate is the difference between the price of the underlying asset and the Strike value (TURBO LONG) or the difference between the Strike value and price of the underlying asset (TURBO SHORT).
• What applies to share Turbo certificates is that the payout of the dividend of the underlying share has almost no effect on the certificate price. On the so-called ex-dividend date, the price of the share falls (i.e. of the underlying asset of the certificate) by the level of the dividend and the Strike value and knock-out barrier also fall by the level of the dividend.
• As soon as the price of the underlying asset reaches the pre-set barrier (long barrier/short barrier, or “knock-out barrier”), TURBO LONG/SHORT certificates become worthless or only the residual value can be paid out to the holder.

What applies to currency Turbo certificates with a fixed maturity date is:
• If the price of the underlying asset rises, the price of TURBO LONG/SHORT rises/falls depending on the size of the leverage.
• The current price of the currency certificate is affected not just by the spot price of the underlying asset, but also by the change in interest rates and the volatility of the exchange rate.
• TURBO LONG/SHORT certificates have a fixed realisation price (so-called Strike value) and knock-out barrier (long/short), which are invariable from the date of issue until the maturity of the product, or until the knock-out is performed. The financing costs are included in one amount in the price of the certificate.
• The actual value of the certificate at maturity is the difference between the price of the underlying asset and the Strike value (TURBO LONG) or the difference between the Strike value and the price of the underlying asset (TURBO SHORT).
As soon as the price of the underlying asset reaches the pre-set barrier (long barrier/short barrier, or the “knock-out barrier”), TURBO LONG/SHORT certificates become worthless or only the residual value can be paid out to the holder.

Your benefits

A Turbo long/short is the ideal instrument for active, market-oriented investors to benefit from short-term market fluctuations with a leverage effect. There is a vast array of products available both for rising (Turbo long) and for falling (Turbo short) prices. The Turbo short is therefore one of the few instruments on the equity market that gives you the chance to benefit from falling markets.

Your advantages

  • Your return potential is disproportionately high due to low capital investment and the leverage effect.
  • You can participate in rising and falling markets.
  • The influence of time value and volatility is very low.

Details you should be aware of

  • You may lose your entire investment.
  • If this is not a quanto product or the product is not secured against a currency risk, the performance of the product is affected by the positive or negative trend of the exchange rate between the product’s currency (CZK) and the currency in which the underlying asset is traded. If CZK strengthens, the price of the product falls and if CZK weakens the price of the product rises.

How do Turbo long/short react to…

… rising markets?
In rising markets the price of Turbo long/short rises/falls at a disproportionately high level in accordance with the leverage chosen.

… stable markets?
In stable markets, the price of Turbo products is influenced by the financing costs, which could decrease or increase it´s price.

… falling markets?
In falling markets the price of Turbo long/short falls/rises at a disproportionately high level in accordance with the leverage chosen.


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