Glossary
Constant leverage certificates
This type falls into the
category of structured products with leverage.
It resembles futures, but the original level of the underlying asset price is calculated daily on the basis of the closing price of the previous trading day. Thus, investing in this certificate for more than 1 day gives the effect of a complex interest. Therefore, changes in the constant leverage certificate value can vary significantly from the changes in the underlying asset price. High volatility of the underlying asset and its sideways trend make it particularly apparent. A constant leverage certificate is ideal only for trend markets. If the investor expects that the underlying asset will grow constantly, he needs a bull certificate, if he expects it will fall –a bear certificate. The maximum losses on the product are limited by the amount of investment.