Products
Equity Derivatives
Derivatives on stocks and indices, from index futures and options to equity swaps, variance swaps and autocallables.
Introductory4 pagesPractitioner2 pagesAdvanced5 pages
1Listed Products
- IntroductoryEquity Index FuturesBecause an index itself cannot be delivered, a trade held to expiry is settled by paying or receiving only the difference between the traded price and the special quotation (SQ value).
- IntroductoryEquity Index OptionsNikkei 225 Options are listed on Osaka Exchange, and calls and puts on the Nikkei Stock Average trade for a premium.
- IntroductorySingle Stock OptionsThe underlyings are securities that Osaka Exchange selects from those listed on Japan's stock exchanges, including ETFs and REITs.
- IntroductoryWarrantsA warrant that a securities company or other third party issues on another company's shares is called a covered warrant.
2OTC Products
Quiz for this chapterQuiz: OTC Products3Equity Exotics
- PractitionerOverview of Exotic Equity ProductsIn knock-in structured notes such as exchangeable bonds (EB), the investor sells a put and the institution that issues the note (the dealer) buys it.
- AdvancedDividend Swaps and FuturesA dividend swap is an over-the-counter trade that exchanges a fixed dividend rate for realized dividends at maturity, and the buyer receives the realized dividends.
- AdvancedVariance Swaps and Volatility SwapsThe buyer receives the notional amount times the amount by which realized variance exceeds the strike, and pays the same calculation when it falls below.
- AdvancedWorst-of OptionsA worst-of payoff is set by the lowest of the assets' levels relative to their initial values, so if one asset rises while another falls, the payoff does not increase.
- AdvancedCliquetsIn a hypothetical example, because caps and floors apply period by period, a path that falls 5.5% over the whole term still pays 8%.
- AdvancedAutocallablesAt or above the early redemption level on an observation date, the note is redeemed at face value plus the coupon, and a rise in the share price earns nothing more.