Tutorial: Twin Win-certificates


What are Twin Win certificates?

Twin Win certificates combine two advantages in one product: the investor benefits from rising prices – in most cases even with a leverage. At the same time, losses of the underlying instrument are directly and 1:1 converted into profits as long as the safety barrier has not been touched. This means that as investor, you also make a profit in the case of moderately falling prices. It is only if the price of the underlying falls to or below the barrier that the protective function of the barrier becomes inactive and the price of the underlying is credited in the investor’s favour at the end of maturity.

How do Twin Win certificates work?

With a Twin Win certificate you can make profits in rising and moderately falling markets. The redemption at the end of maturity depends on the performance of the underlying instrument. If the price of the underlying is above the initial value at the end of maturity, the redemption equals the initial value plus the participation in the positive performance in percentage terms of the underlying above the initial value. If the price of the underlying is below the initial value at the end of maturity and if it has never fallen to or below the safety barrier during the term of the certificate, the redemption equals the initial value plus the participation in the absolute difference in percentage terms. This means that the performance of the underlying instrument is converted into a positive return in this case. If the underlying has fallen below or to the barrier, the certificate turns into a direct investment in the underlying and is settled according to the performance of the underlying at the end of maturity.

A number of Twin Win certificates come with leverage. Here, the exchange ratio is not 1:1, but 1:1.2 or even higher. This leverage boosts the profits, because they get multiplied with this factor. This means that at an exchange ratio of 1:1.5, your payout equals one and a half times the actual price increase.

Your benefits

Twin Win certificates are optimal if you expect the underlying to basically show a positive development, but if you do envisage price fluctuations. Losses down to the barrier are paid out as profits 1:1 at the end of maturity. This means you benefit from price fluctuations both ways and enjoy more safety than in the case of direct investments in the underlying (unless the barrier is hit).

Your advantages

  • You can benefit from rising and falling prices.
  • Losses in the underlying are turned into profits as long as the barrier has not been touched.
  • You can be sure that your Twin Win certificate will never be worth less than the underlying instrument at the expiry date.

Details you should be aware of

  • Between issue date and maturity, price fluctuations are possible, which means that the sale of the Twin Win certificates prior to maturity may result in a loss.
  • The outlined payment structure only applies to the end of maturity.
  • The risk puffer is limited by the barrier. If the price of the underlying falls to or below the barrier, the safety cushion gets lost and you may incur losses to your capital.

How do Twin Win certificates react to…

… rising markets?
If the underlying instrument rises, the value of Twin Win certificates rises as well.

… stable markets?
If the price of the underlying instrument does not move, neither does the value of the Twin Win certificate.

… falling markets?
If at the end of maturity the underlying falls to a price that does not touch the barrier you benefit from Twin Win effect: the price losses are converted into profits and paid out. If the price falls to or below the barrier, the value of the Twin Win certificate equals the nominal value minus the negative performance.

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