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Structured Equity Derivative


An equity derivative that is packaged (created) as a single, customized product, using standard and non-standard derivative products. Structured equity derivatives typically involve equity-based or equity-linked exchange-traded options and futures as well as over-the-counter (OTC) contracts (OTC options, etc.)

OTC derivatives, as a building block of structured equity derivatives, provide more flexibility compared to standard derivatives, in a way that can better meet the various requirements and specifications of market participants (end-users or investors), including specific payoff patterns, risk characterization, risk-return profiling, hedging, etc.

Structured equity derivatives can be packaged using OTC options, swaps (equity swaps), and equity products (equity-linked notes, ELNs, etc.)

Equity-linked notes, itself a building block of such structured derivatives, is also a prime example of structured equity derivatives. It capitalizes on the performances of a fixed-income instrument and some underlying equity. This note is a standard fixed-income instrument whose coupon is effectively a pass-through of a specific underlying equity dividend.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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