Leveraged products

Leveraged products are options that are securitised. The investor acquires the right to buy (‘call warrant’) or sell (‘put warrant’) an underlying asset at a predetermined strike price on a specific date. The capital invested is lower than for a direct investment in the underlying asset, which is why participation in the price performance is disproportionately high in relation to the capital invested; i.e. there is a leverage effect. Leveraged products allow the investor to benefit from a short-term price trend or to hedge their portfolio without major reallocations. However, they require a high risk tolerance and constant monitoring, as there is a possibility of losing all the invested capital.