Covered Warrants

What are the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.?

Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. are financial instruments that give the right but not the obligation, to buy or sell a specific underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset at a predetermined price within a predetermined period ('American-style Covered Warrant) or within a predefined deadline (European-style Covered Warrant). They are derivative instruments as they derive their value from the price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. financial asset. The underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. assets of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. can be any traded activity on a regulated stock exchangeThe Stock Exchange is a regulated market where financial instruments are listed and traded, represented by debt securities (bonds), capital shares (stocks) and derivative financial instruments. In Italy the Stock Exchange is electronic and it has been managed by the Italian Stock Exchange (Borsa Italiana SpA) since 1998., generally sharesTitle document showing the minimum stake of a shareholder in the share capital of a company that entitles the holder or the Shareholder, to receive a part of the profits eventually distributed by the company and which can confer the right to vote at the shareholders meetings. There are different types of shareholdings depending on the company incorporation and these can be: ordinary, preference or savings., market indexes, currencies, bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. and commodities. The optional right to buy or sell a certain underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset is represented by the price paid by the buyer to the seller. This amount of money is also known as a 'premium'.

Investment products that give the right, but not the obligation, to buy or sell an underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset at a predetermined price and date.

Standard elements of a Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

ISSUERThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations.: Whoever issues the instrument and guarantees its liquidityLiquidity is the ability of an investment in real or financial assets to be quickly transformed into real money and in favorable economic conditions, i.e. without decreases compared to the price of current market. on the trading market or at maturity;
UNDERLYINGThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.: Financial asset from which the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. derives value.
TYPE OF RIGHT: to be purchased when Covered CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is bought or to be sold when a Covered PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is bought
STYLE: American or European
STRIKE PRICEIn an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset.: the price of the financial activity at which it is possible to exercise the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. right.
MULTIPLIER: the number of underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. financial activities controlled by the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant..
EXPIRY: The period in which the American Style Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. can be exercised or the date at which the European Style Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. can be exercised.
Minimum LotA minimum lot indicates the minimum number of financial instruments that can be traded on an organized market.: The minimum number of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. that can be traded on the market.

How they work

There are two types of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. on the market: CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Warrants and PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Warrants. The former are financial instruments used by investors who have bullish expectations, expecting a rising market, with respect to the market value of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset, the latter are used by investors with bearish expectations, expecting the market to fall.

Operation to maturityExpiry or Maturity is the date a financial instrument ceases to exist or matures. of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.

If the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. were brought to an expiry dateThe date the effects associated with a financial instrument cease and as a result are no longer valid., they are automatically exercised and the investor is reimbursed by the issuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations..

In the case of Covered CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Warrants the amount of money that the investor receives for each Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. held is equal to the difference, if positive, between the market price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset and the exercise priceIn an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying. multiplied by its multiplier.

Formula Covered CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

COVERED WARRANTA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. CALLCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. VALUE = (UNDERLYING ASSET PRICE – EXERCISE PRICEIn an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying. OF CW) X MULTIPLIER

Formula Covered PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

In the case of PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Warrants, the sum received by the investor for each Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. held is equal to the difference, if positive, between the exercise priceIn an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying. and the market price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset multiplied by the multiplier.

COVERED WARRANTA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. PUTA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. VALUE = (EXERCISE PRICE OF CW-UNDERLYINGThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. ASSET PRICE) X MULTIPLIER

A feature in the operation of a Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is its responsiveness to price movements characterized by the leverage effectUsing the leverage effect it is possible to invest an amount of financial resources in excess of the capital actually used, therefore obtaining greater exposure in proportion to price changes of the Underlying financial asset.. Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. magnify, both upwards and downwards, the performanceThe performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms. of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. in that the investment in Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. requires only a fraction of the capital that would be required for a direct investment in the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent..

Characteristics

There are several variables that characterize the evolution of the market price of a Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.. Their value can be split into two main categories: intrinsic value and time value.

INTRINSIC VALUE

The intrinsic value represents the revenue that would be received by exercising an American style warrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. and it depends on the Stock market price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. and on the exercise priceIn an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying. or strike priceIn an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset.. The intrinsic value of a CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is calculated as the difference between the price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. and the exercise priceIn an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying., all multiplied by the multiplier. The intrinsic value of a PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is the difference between the strike priceIn an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset. and the current price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent., all multiplied by the multiplier.

TIME VALUE

Time value represents the difference between the market value and the intrinsic value. Over a lifetime, a warrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is generally worth more than its simple intrinsic value. The importance of time value is crucial in the composition of the price of a Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.: the closer it gets to the expiry dateThe date the effects associated with a financial instrument cease and as a result are no longer valid. of the instrument the more the time value decreases as the uncertainty related to the exercise or not of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. reduces. Consequently, the price of the instrument decreases bringing it closer to the intrinsic value.

Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. terminology

In practice, time value is nothing more than an expression of the probability that a warrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is 'In-the-money' at expiration. In the case of a CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. the term 'In the money' refers to a situation in which the current value of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. is greater than the current value of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. strike. When the current value of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. is exactly equal to that of the strike, the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is referred to as 'At the Money'. The term 'Out of the money' it indicates particular cases in which the market price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. is lower than the strike priceIn an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset. of the CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. or higher than the strike priceIn an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset. of the PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant..

OTHER FACTORS INFLUENCING THE PRICE OF A COVERED WARRANTA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

In addition to these two main categories, other elements can influence the price of a Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.. The factors that affect the value of these financial instruments are as follows:

VolatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.

The volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. in the market value of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. is one of these factors, having a positive effect on the value of the Warrants as the more volatile a stock is, the greater the potential profit for the investor. There are two measures of volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.: historical volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. and implied volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.. Historical volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. is calculated on historical data of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. asset. Implied volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. is an estimate based on expectations of anticipated future price volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.. As implied volatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk. is a prediction and is not made explicit by historical data.

Dividends and Interest rates

Expected dividends and interest rateThe interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year. levels for risk-free assets are other factors that influence the price of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.. The higher the expected dividends of CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Warrants on the same underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent., decrease in value while the PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Warrants increase in value. As for interest rates, an increase will drive up the price of a CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. and decrease that of a PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. (equal to other market factors).

GreeksLetters of the Greek alphabet that indicate the price sensitivity of an Option to the variation in parameters that influence it: Underlying Price (Delta and Gamma), volatility (Vega), time to maturity (Theta) and interest rate (Rho).

The variables described are synthesised by some indices of sensitivity known as GreeksLetters of the Greek alphabet that indicate the price sensitivity of an Option to the variation in parameters that influence it: Underlying Price (Delta and Gamma), volatility (Vega), time to maturity (Theta) and interest rate (Rho). as they are represented by letters of the Greek alphabet. The DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset. coefficient measures the sensitivity of the price of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. on the spot price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.. The VegaVega, in options, is usually used to calculate an option's sensitivity to changes in the volatility of the underlying asset. Specifically, for a buyer of the options, Vega is always positive, while a seller of options will always find Vega to be negative. influences the price of the volatile underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. component of the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.. RhoThe Greek letter Rho, is the indicator measuring the change in the premium of a Warrant at the varying of the interest rate offered by the money market. is the price sensitivity of the Warrants to the interest rateThe interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year.. GammaThe Greek letter Gamma indicates the change in Delta of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative to delta of a derivative instrument in respect of the price of the Underlying asset. expresses the variation of DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset. for a variation of a unit of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. value. ThetaTheta is a measure of the rate of decline in the value of an option due to the passage of time. Theta is also referred to as 'Time decay' on the value of an option. If everything is held constant, then the option will lose value as time moves closer to the maturity of the option. finally is the index which indicates the decline of the time value, namely, the way in which the value of the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. changes with the diminishing residual maturityExpiry or Maturity is the date a financial instrument ceases to exist or matures. of the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant..

GreeksLetters of the Greek alphabet that indicate the price sensitivity of an Option to the variation in parameters that influence it: Underlying Price (Delta and Gamma), volatility (Vega), time to maturity (Theta) and interest rate (Rho). and Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. values

The following table summarises the effect of an increase of the variables summarised by the GreeksLetters of the Greek alphabet that indicate the price sensitivity of an Option to the variation in parameters that influence it: Underlying Price (Delta and Gamma), volatility (Vega), time to maturity (Theta) and interest rate (Rho). on the theoretical value of a CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. and PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Warrants. The behaviour in case of a decline in the variables is speculative.

= increase in the value of the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

= decrease in the value of the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

Possible strategies (the most used / common)

Trading strategies

The most common strategy developed by the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant. is trading. These financial instruments make possible to achieve greater returns than a direct investment in the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.. As a result of the leverage effectUsing the leverage effect it is possible to invest an amount of financial resources in excess of the capital actually used, therefore obtaining greater exposure in proportion to price changes of the Underlying financial asset. that characterises Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates., market prices for these products are more reactive and they magnify movements in price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. financial asset. The leverage will also magnify any potential losses that may occur. The maximum loss is limited and equal to the capital invested, which is the premiumIn option contracts, the premium is the amount of money that a buyer pays the seller to have the right to buy or sell an Underlying asset at or by a future date at a predetermined price. Relating to Bonus Certificates the premium is represented by the Bonus and is paid to the investor if the value of the Underlying, (if it is a European-style certificate or continuous basis if an American-style certificate), at maturity does not reach the Barrier Level. paid to buy the Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.. The gains may instead be unlimited for those who buy a CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Covered WarrantA Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.. PutA Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option. Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. have a ceiling on potential gains linked to the impossibility of the financial or real asset having a value less than zero.

HedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. strategy

Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. may also be used to protect investments from the risk of loss of value. This strategy is called hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. and represents a kind of insurance against losses in the value of individual stocks or entire equity portfolios held by the investor. Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. may also be used to cover financial investments held in a foreign currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue. that are subject to exchange rate risks rather than covering interest rateThe interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year. risks. The insurance, whose premiumIn option contracts, the premium is the amount of money that a buyer pays the seller to have the right to buy or sell an Underlying asset at or by a future date at a predetermined price. Relating to Bonus Certificates the premium is represented by the Bonus and is paid to the investor if the value of the Underlying, (if it is a European-style certificate or continuous basis if an American-style certificate), at maturity does not reach the Barrier Level. is the equivalent of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. purchased, is triggered in the event of a negative outcome covered by the investor. The hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. can be developed according to two different approaches:

Static hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. i.e. this is the easiest method of coverage an investor can implement. Once the number of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. has been identified to cover their position, the investor will never change the strategy. The drawback of this method is that the hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. will only be realised on the expiration date of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates..

Number of Covered Warrants = Value of Portofolio in Euros

to be purchased Strike X Multiplier

Dynamic hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. is a more complex alternative to static hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. requiring periodic adjustments of the total number of covered warrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. needed to cover the investor's position. It has the advantage of being a strategy that takes effect even before the expiry of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.. The dynamic hedgingThrough the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk. is linked to the introduction of the DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset. coefficient in the definition of the number of Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. needed to cover the position. By measuring the sensitivity of the price of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates. on the spot price of the underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent., the DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset. coefficient varies continuously. It is this variation that leads to the need to rebalance the coverage with every significant deviation of DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset..

Number of Covered = Value of the Portfolio in Euros

Warrants to be purchased Strike x Multiplier x DeltaThe Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset.

Cash extraction strategy

A third strategy is called Cash Extraction. An investor who owns sharesTitle document showing the minimum stake of a shareholder in the share capital of a company that entitles the holder or the Shareholder, to receive a part of the profits eventually distributed by the company and which can confer the right to vote at the shareholders meetings. There are different types of shareholdings depending on the company incorporation and these can be: ordinary, preference or savings. which have appreciated significantly in value may decide to cash in gains accrued by selling the sharesTitle document showing the minimum stake of a shareholder in the share capital of a company that entitles the holder or the Shareholder, to receive a part of the profits eventually distributed by the company and which can confer the right to vote at the shareholders meetings. There are different types of shareholdings depending on the company incorporation and these can be: ordinary, preference or savings. on the market. He then subsequently invests only part of the capital proceeds from the sale of the initial investment in Covered CallCall Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset. Warrants on the same underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.. In this way any risks of a fall in value of the sharesTitle document showing the minimum stake of a shareholder in the share capital of a company that entitles the holder or the Shareholder, to receive a part of the profits eventually distributed by the company and which can confer the right to vote at the shareholders meetings. There are different types of shareholdings depending on the company incorporation and these can be: ordinary, preference or savings., maybe even substantial drops, will be eliminated while at the same time maintaining the ability to benefit from any further price revaluations of the same. In defining the terms of use, the investor will fix the maximum potential loss that he is willing to suffer, equal to the premiumIn option contracts, the premium is the amount of money that a buyer pays the seller to have the right to buy or sell an Underlying asset at or by a future date at a predetermined price. Relating to Bonus Certificates the premium is represented by the Bonus and is paid to the investor if the value of the Underlying, (if it is a European-style certificate or continuous basis if an American-style certificate), at maturity does not reach the Barrier Level. paid during the purchase of the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.. Having defined the maximum acceptable loss, the investor will continue to benefit from the price movements of the financial asset underlyingThe Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent. the Covered WarrantsCovered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.

ListingThe term Listing means the admission to the stock market of a security or a financial product. and Trading

Text modified: 15.07.2020

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The offer of the Securities (the “Offer”) is made to the general public in a specific jurisdiction and any offer, solicitation of an offer, distribution of marketing material relating to the Securities will not be made in the United States of America, Canada, Australia, Japan or any other country where such acts are forbidden without specific exemptions or authorizations from the relevant competent authorities (the "Other Countries").

No Offer may be made in the United States of America, or to any citizen, resident, taxable person in the United States of America ("U.S. Person" or "United States Person" within the meaning of U.S. Securities Laws or other relevant local regulations, a US Person) and no distribution of any documents relating to the Offer may be made in the United States of America. The Securities have not been and will not be registered nor under the United States Securities Act of 1993, as from time to time amended, neither under any financial rules applicable in the United States of America. Neither the Securities and Exchange Commission ("SEC") nor any other supervisory authorities in the United States of America has approved or has not approved the issuance and/or the Offer of the Securities or has taken any position as to the accuracy or inaccuracy of the Prospectus and/or the Final Terms/Condizioni Definitive of the Securities. According to the provisions of the United States Commodity Exchange Act, trading in the Securities has not been approved by the United States Commodity Futures Trading Commission ("CFTC").

The Securities have not been and will not be registered under the existing Securities rules applicable in Canada, Japan, Australia or in the Other Countries, and therefore they may not be, directly or indirectly, offered, sold or otherwise delivered in Canada, Japan, Australia and in the Other Countries or to any citizen, resident, taxable person in Canada, Japan, Australia and the Other Countries and the documentation relating to the Offer may not be distributed in Canada, Japan, Australia and the Other Countries. In any event no person, being US Person under the US Securities Laws or under any other local applicable rule or resident in Canada, Japan, Australia and the Other Countries, may join the Offer.
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I hereby declare that I have read and fully understood and that I agree to comply with the above selling restrictions and undertake not to transmit, directly or indirectly, any document relating to the Offer of the Securities in the United States of America, Canada, Australia, Japan or in the Other Countries.

WARNING: the above declarations constitute self-certification pursuant to Decree by the President of the Republic No. 445 of 28 December 2000, as subsequently amended. False declarations are punishable by law.

I hereby declare that I am not an US Person nor a citizen, a resident or a taxable person of the United States of America or Canada, Australia, Japan or of the Other Countries, nor will I purchase on behalf of or for the benefit of one or more of such persons and I will be responsible for any consequences of such declaration. I hereby further declare that I am not physically present in the United States of America or Canada, Australia, Japan or in the Other Countries.

By indicating 'Accept' below, you declare that you accept without reserve or exception the entire Terms of Use and any additional notices that may be contained in the sections or on the pages of this web site, and that you will be responsible for any consequences. Otherwise, you should not access this site.

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Focus

Certificates

Capital Protected Certificates

Conditionally Protected Certificates

Non-Protected Certificates

Leverage Certificate

Covered Warrants

Bonds

Expired Products

Know the products

Learn more

Featured

Covered Warrants

How they work

Characteristics

VolatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.

Dividends and Interest rates

Possible strategies (the most used / common)

Trading strategies

Cash extraction strategy

ListingThe term Listing means the admission to the stock market of a security or a financial product. and Trading

Covered Warrant

Focus

Certificates

Capital Protected Certificates

Conditionally Protected Certificates

Non-Protected Certificates

Leverage Certificate

Covered Warrants

Bonds

Expired Products

Know the products

Learn more

Featured

Covered Warrants

How they work

Characteristics

VolatilityVolatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.

Dividends and Interest rates

Possible strategies (the most used / common)

Trading strategies

Cash extraction strategy

ListingThe term Listing means the admission to the stock market of a security or a financial product. and Trading

Covered Warrant

Disclaimer