Turbo long/short come with an inbuilt leverage effect. The price movements of the underlying are reflected relatively independent of volatility. If the price of the underlying instrument rises, the price of the Turbo long/short rises/falls according to the chosen leverage at a disproportionate level. The leverage effect results from the lower purchase price of a Turbo products relative to the direct investment in the underlying. The lower the purchase price of the Turbo long/short, the bigger the leverage. The leverage follows this simple formula:
Turbo long/short have a strike (base) price and a barrier.
Turbo long/short with fixed maturity date has the Strike value and the knock-out barrier unchanged from the issue date up to the product maturity or to the point when the knock-out is performed. Costs of financing are included as one amount in the price of certificate.
In case of turbo long/short without fixed maturity date the Strike value and the knock-out barrier are continuously amended with daily costs of financing. Certificate price does not include the costs of financing.
The intrinsic value of the Turbo long/short is the difference of the share price and the strike price (Turbo long) or the difference between the strike price and the share price (Turbo short), respectively.