Smart Hedging for Future Security
Market Outlook Consideration: The current global economic environment is fraught with challenges, including ongoing geopolitical tensions, the potential for recession, and persistently high interest rates. These factors contribute to market uncertainty and heighten the need for defensive strategies. Investing now in hedging strategies for the upcoming year may allow investors to better prepare for 2024.
Downside Protection: Historical performance during recessionary periods indicate that market indices like SPX and SX5E can experience significant downturns (see graphs below). Investing in a Put Warrant offers a safety net against potential market downturns over 2024. If the SPX and SX5E decline, the value of the Warrant will increase, helping to offset losses in the broader portfolio.
Current Market Situation: The current market conditions offer a great opportunity to invest in hedging strategies at a lower cost due to volatility at multi-year lows and bullish market trends
Time Horizon: Investing in today in a Dec24 strategy is suitable to hedge investor’s portfolio for the upcoming year – on 2023 budget. It also provides a tactical hedge over the upcoming year. The inherent flexibility on secondary market of put warrants allows investors to adapt their strategies based on market performance. If indices perform well, the warrants can expire unused, with only the low premium paid as the cost for downside protection. However, if indices perform poorly, the put warrants help mitigate losses.
Portfolio Optimisation: The low premium of 2.60% for this put warrant makes it an inexpensive insurance policy against downturns.
Lower Premium through Best-Of: The Best-Of feature means that the put will be executed on the index which has the least negative performance. This feature translates into direct cost savings for investors seeking downside protection on both United States and European equities. When compared to a traditional 1-year put option with a 95% strike on a single index, the Best-Of structure offers a lower premium (72.3% discount vs listed option on SPX and 59.3% discount vs listed option on SX5E) thanks to correlation parameters.
Put Warrant Best-Of | Product Snapshot
For informational purposes only. Not investment advice.
Market Outlook Consideration: The current global economic environment is fraught with challenges, including ongoing geopolitical tensions, the potential for recession, and persistently high interest rates. These factors contribute to market uncertainty and heighten the need for defensive strategies. Investing now in hedging strategies for the upcoming year may allow investors to better prepare for 2024.
Downside Protection: Historical performance during recessionary periods indicate that market indices like SPX and SX5E can experience significant downturns (see graphs below). Investing in a Put Warrant offers a safety net against potential market downturns over 2024. If the SPX and SX5E decline, the value of the Warrant will increase, helping to offset losses in the broader portfolio.
Current Market Situation: The current market conditions offer a great opportunity to invest in hedging strategies at a lower cost due to volatility at multi-year lows and bullish market trends
Time Horizon: Investing in today in a Dec24 strategy is suitable to hedge investor’s portfolio for the upcoming year – on 2023 budget. It also provides a tactical hedge over the upcoming year. The inherent flexibility on secondary market of put warrants allows investors to adapt their strategies based on market performance. If indices perform well, the warrants can expire unused, with only the low premium paid as the cost for downside protection. However, if indices perform poorly, the put warrants help mitigate losses.
Portfolio Optimisation: The low premium of 2.60% for this put warrant makes it an inexpensive insurance policy against downturns.
Lower Premium through Best-Of: The Best-Of feature means that the put will be executed on the index which has the least negative performance. This feature translates into direct cost savings for investors seeking downside protection on both United States and European equities. When compared to a traditional 1-year put option with a 95% strike on a single index, the Best-Of structure offers a lower premium (72.3% discount vs listed option on SPX and 59.3% discount vs listed option on SX5E) thanks to correlation parameters.
Put Warrant Best-Of | Product Snapshot
For informational purposes only. Not investment advice.