Timeline for Does a barrier breach in a geared put structured note result in greater losses for the investor vs a plain knock in barrier?
Current License: CC BY-SA 4.0
15 events
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| Nov 5, 2020 at 3:01 | review | First posts | |||
| Nov 5, 2020 at 14:16 | |||||
| Nov 1, 2020 at 14:11 | vote | accept | Girish | ||
| Oct 28, 2020 at 13:09 | comment | added | Daneel Olivaw | Note that in the example above, it was arbitrarily chosen that the gearing or leverage factor $g$ is equal to $100\%/B$, but it could also have been set arbitrarily to $g=3$, $g=B/100\%$ or whatever. A gearing is merely a multiplicative factor. | |
| Oct 28, 2020 at 13:04 | comment | added | Daneel Olivaw | "Gearing" is a pretty generic term that means leverage, a multiplicative factor to some quantity, so I don't believe "geared put" is a standard term with unambiguous meaning, though some people might interpret it your way. For example, in this article, the author defines a geared put in a way which matches your question, namely the loss once the barrier $B$ has been breached is $100\%/B$, which for $B=50\%$ does give a gearing of 2 as in your example. | |
| Oct 28, 2020 at 12:06 | answer | added | Jan Stuller | timeline score: 2 | |
| Oct 28, 2020 at 11:58 | comment | added | user34971 | Yes, assuming you mean a geared down and in versus a regular (not geared) down and in. If on the other hand you are comparing a geared vanilla put with a regular down and in put then you can't compare the two as one is path-dependent and the other isn't, obviously. | |
| Oct 28, 2020 at 11:09 | comment | added | Girish | Would appreciate if my understanding can be confirmed... | |
| Oct 28, 2020 at 11:06 | comment | added | Bob Jansen♦ | Thank you for showing some effort. | |
| Oct 28, 2020 at 11:06 | history | reopened | Bob Jansen♦ | ||
| Oct 28, 2020 at 11:05 | history | edited | Bob Jansen♦ | CC BY-SA 4.0 |
added 1 character in body; edited title
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| Oct 28, 2020 at 11:01 | history | edited | Girish | CC BY-SA 4.0 |
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| Oct 28, 2020 at 10:16 | comment | added | Girish | My understanding is that once the barrier is breached in note with a geared put, the investor ends up paying more than a regular knock in option as the loss participation is geared. So for example at a 50% barrier breach the loss participation rate wud be double? | |
| Oct 28, 2020 at 8:18 | comment | added | Bob Jansen♦ | What have you tried yourself to answer this question? | |
| Oct 28, 2020 at 7:43 | history | closed |
Daneel Olivaw Bob Jansen♦ |
Needs details or clarity | |
| Oct 28, 2020 at 6:44 | history | asked | Girish | CC BY-SA 4.0 |