With a factor certificate long/short investors can use a constant factor (= leverage) to invest in different markets. Factor certificates have no knock-out barrier. Therefore the certificate cannot knock out. Disproportionate losses are still possible due to the factor. The calculation of the certificate is done on a daily basis.
Erste Group factor certificates are issued with a stop-mechanism (stop-loss buffer). This means that the calculation of the certificate stops in case of large losses (when the stop-loss barrier is broken) and a new day is simulated. In this case, intraday adjustments are made for the stop-loss barrier, the previous reference price and the previous cash amount.
There are factor certificates long and factor certificates short. A factor certificate long benefits from rising prices of the underlying. A factor certificate short benefits from falling prices of the underlying.