Investment Products

Derivative instruments can be used in order to develop investment products which have differentiated payout potential. Generaly these products can be classified in two groups.

 1 - Capital Guaranteed Investment Products :

Generally a capital guaranteed products is formed by being long on an option and the position of the product is long gamma. The option premium is paid with the interest gain of the capital that will be earned through the life of the product. Since the value of an option can be zero in the worst case investor can only lose the risk free return from his capital. If the market moves consistent with the position of the product, option can generate a higher return then its original premium and the product generates more return than the risk free return. The below products are the examples of capital guaranteed investment products.

- One Touch Deposit
- No Touch Deposit
- Double One Touch Deposit
- Double No Touch Deposit
- European Range Deposit
- European Digital Deposit
- Range Accrual Deposit
- Wedding Cake Deposit
- Performance Linked Deposits

2 - Investment Products without Capital Guarantee

The return potential of the capital guaranteed investment products are limited with the risk free return of the capital currency. If the risk free returns are very low for the investment currency then the premium that will be paid to the option will also be low. In this case profit potential of the product can be also low.

If the investor wishes to risk its initial capital then the return potential can be increased by selling an option. The premium gained by selling the option can be used to invest another option or collected by the investor as return.  The below products are the examples of capital guaranteed investment products.

- DCD (Dual Currency Deposit)
- DCD Linked One Touch
- DCD Linked No Touch
- DCD Linked Double One Touch
- DCD Linked Double No Touch
- DCD Linked European Range
- DCD Linked European Digital
- DCD Linked Range Accrual




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