Erste Group Participation certificate E-mini S&P 500 Open end

E-mini S&P500 Participation Certificates 

Price of a e-mini S&P500 participation certificate = price of the nearest e-mini S&P500 futures contract x RATIO x USDCZK.

Therefore, the performance of this e-mini S&P500 participation certificate depends on the performance of the e-mini S&P500 futures contract, the RATIO and FX rate of USDCZK. The certificate always monitors the nearest e-mini S&P500 futures contract on the CME stock exchange. Of course, the certificate has unlimited maturity. Thus, the roll-over or “rolling” of the contracts must take place regularly each quarter shortly before the expiry of the nearest futures contract. 

Roll-over means that an expiring futures contract is sold and the next nearest futures contract is bought. There may be or usually is a change in the RATIO during roll-over. On the one hand, roll-over is encumbered by selling and buying costs of futures contracts and, on the other, there may be losses or profits. 

Profits during roll-over arise when the price of the expiring futures contract is higher than the price of a new futures contract (so-called “backwardation”). More could be invested in new futures contract and the RATIO rises.

Losses during roll-over arise when the price of an expiring futures contract is lower than the price of a new futures contract (so-called “contango”). And so less may be invested in the new futures contract and the RATIO falls.

The higher the RATIO the more the client participates in the growth of the e-mini S&P500 futures contract.

The increase of the USDCZK exchange rate (so-called weakening of the crown against the USD) supports the rise of the e-mini S&P500 certificate price. In contrast, the fall in the USDCZK exchange rate (so-called strengthening of the crown against the USD) supports the fall of the e-mini S&P500 certificate price.