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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 and without expiry date.

How do Turbo long/short work?

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.


Learn more…

The tutorial gives you detailed information about the functionality, as well as the chances and risks of the product.

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