Search
Generic filters
Filter by Categories
Accounting
Banking

Finance




Bear Turbo Certificate


A turbo certificate that aims to bet on price decreases. The participation in the downward movement of the underlying will increase as the underlying loses more value (price decrease), and vice versa. The price of a short turbo certificate is expressed in the following function:

p (St, t) = max (Kt – St, 0)

Where: Kt = K0 exp {(r- z) × t}

St is the market price of the underlying at a given time, t.

Kt is the strike price (it is not constant but rather changes according to the above formula).

r is the short-term refinancing rate (constant).

z is the financing parameter.

The certificate trades at this price. The seller of the certificate (the short) can reverse his/ her short position by procuring a long position at the certificate’s market price (the prevailing price at the time of the transaction).

A bear turbo certificate is also known as a put turbo certificate or a short turbo certificate.



ABC
Finance, as a field of knowledge, is substantially wide-ranging and virtually encompasses everything in the realm of corporate finance, financial management, ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*