Equities

Structured products linked to underlying stocks

Structured products linked to an underlying stock.

What are Equity Linked Investments (ELIs)?

An ELI is a structured product linked to an underlying stock which delivers an enhanced yield* assuming that the underlying stock will not fall below a certain price. If the stock does fall below this price by a predetermined future date, investors will then receive shares of the underlying stock. ELIs are only recommended for investors with an appropriate risk appetite as they carry significant risks.

Types of ELIs

There are various types of ELI payoffs available such as Equity Linked Note, Fixed Coupon Note, Twin Win Note, Step Down Auto-Callable Note, among others.

Ways to earn returns

ELI linked to a single stock is a short-term structured product involving an underlying option, which allows the issuer to deliver to the investor on maturity either cash or the underlying, depending on the fulfillment of certain conditions. Generally, a higher yield will be achievable if:

  • volatility of the underlying equity is high
  • proximity of the strike price of the underlying equity to the current market price is close. The closer the strike price to the market price, the higher the yield will be

Benefits and risks

Benefits

Attractive yields

Potentially high yields are possible depending on investors choice of underlying stock and trade parameters.

Alternative investment entry

Investors waiting to buy a stock at a lower price can also potentially benefit from an enhanced yield* while waiting for the stock's price to drop.

Risks

Market Risk

Changes in the price, level or value of the underlying equity can be unpredictable, sudden and large. Such changes may result in the price or value of the ELIs moving adversely to your interest.

Issuer’s credit risk

ELIs are issued by financial institutions and investors are exposed to the issuer's credit risk.

*Generally, yields depend on the level of risk undertaken by the customer. Yields are generally lower for less aggressive strike rates.

For more information, contact your Wealth Manager or visit any of our branches.

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