A structured product (structured certificate) that has a leverage mechanism (constant factor) and is not subject to a knock-out barrier (KO barrier). The leverage effect may result in disproportionate losses, though the gains are likewise disproportionate. The certificate is directly linked to the underlying (equity, index, commodity, etc.)

A long factor certificate allows the investor to benefit from rising prices, while a short factor certificate enables the investor to gain from falling prices. Gains/ losses are calculated on a daily basis. For example, for a certificate with a factor of 2, on each day throughout the life of the certificate gains/ losses will be multiplied by 2 (twice the performance, negative or positive).

A different flavor of the certificate comes with a stop-loss barrier, meaning that the performance calculation will cease to continue once losses have exceeded the barrier (hence it is also called a stop-loss buffer).