Unlike passive investment instruments, these instruments attempt to outperform a benchmark by using various techniques such as stock-picking and timing, etc.

Achieving risk-free profit without the use of capital, made possible by exploiting inefficiencies on the capital markets.

Price at which the investor can purchase a security (opposite: bid price).

Checking the behaviour of structured products during their term, with the help of historical data.

Classified as one of the exotic options. The option comes into play (knock-in) or lapses (knock-out) if the price of the underlying exceeds or undercuts a certain level (the barrier) during the term.

Falling stock exchange prices extending across the entire market, or at least important parts of it (opposite: bull market).

A yardstick used to measure the performance of a financial investment or portfolio (also known as the reference or comparative index).

Commission on the purchase or sale of securities.

Rising exchange prices extending across the entire equity market or at least over significant parts of the market (opposite: bear market).

An option that entitles but does not oblige the purchaser to acquire a specified quantity of an underlying at a pre-defined strike price, by or on a specified date (also: purchase option).

Denotes the lower limit that is paid back on maturity, regardless of the price of the underlying (also: floor).

The number of outstanding equities multiplied by the current equity price gives the market capitalisation. It is a measurement of the value of a company (also: market capitalisation).

Security pledged to guarantee a debt.

The risk that the creditworthiness and hence solvency of a counterparty (issuer) may be impaired.

A derivative financial instrument used to trade default risks on loans, bonds or debtors. The collateral taker regularly pays a fee and, on the occurrence of a credit event (such as the insolvency of the debtor) receives a compensation payment or the right to sell bonds affected by the credit event to the collateral provider at their nominal value.

Quality of a debtor. Includes an issuer’s solvency (ability to pay) and willingness to pay, which give an indication of creditworthiness and borrowing capacity.

The delta indicates the absolute change in value of the option, dependent on the change in the value of the underlying.

A product derived from an underlying security; it comes into being on the basis of a contractual agreement between two parties.

Diversification denotes the distribution of the sum invested across several investment objects, for the purpose of reducing the portfolio’s overall risk. The idea is “not to put all your eggs in one basket” (also: spreading or distributing risk).

Up-and-coming markets or economies. The term denotes developing countries that have access to the international capital market.

Investment fund that is traded on a market in the same way as a stock.

Investors who subject their assets to the influence of unsafe securities (risk factors) have an “exposure” to (or in) such securities.

Contract whereby two parties undertake to settle a transaction at a later time.

Forward transaction whereby one party undertakes to purchase the underlying at a specified price and at a specified point in time (long position). The counterparty undertakes to deliver (short position) or to pay cash compensation. Futures are traded in a standardised form.

The gamma measures the absolute change in the delta when the value of the underlying changes by one unit.

Unlike traditional investment funds, hedge funds mainly utilise alternative investment instruments and strategies such as short-selling and borrowing; they are subject to weak regulation or are not regulated at all.

The use of additional positions to compensate for the price fluctuations of an existing position.

Fluctuations in the price of an underlying during a specific period in the past, measured as the standard percentage deviation per year.

The average annualised standard deviation expected by market participants in the return on an underlying over the term of the derivative.

Supplies information about the performance of a market. The composition of the index is adjusted at regular intervals so that it remains representative of the market in question. A basic differentiation is made between price indices and performance indices.

Investors who invest the funds they collect on account of their business activities (pension funds, insurance companies) on the financial markets.

For a call option, the intrinsic value corresponds to the positive difference between the price of the underlying and the strike price. Conversely, a put option has an intrinsic value if the difference between the strike price and the price of the underlying is positive.

An investment fund is an asset that is constituted, in response to public advertising, by a large number of mutually independent investors to form a joint capital investment; it is managed for the account of the investors by a fund-management company, in accordance with the principle of diversification.

Public offering of securities by an issuer.

Refers to companies, banks or public debtors who raise money on the capital market and issue securities in return (also: debtor).

Denotes the bank (or banks) heading an issuing consortium. The lead manager is responsible for the composition of the consortium, for the drafting of the conditions and contracts, and for documentation, etc.

In the context of structured products, liquidity means the ability to buy and sell at fair conditions, at all times. This is ensured by the lead manager in its function of market maker.

Decision by the stock exchange (admissions office) on the admission of a security to market trading.

A bank or securities firm which undertakes to stipulate permanently binding sale and purchase prices for specified securities.

Day when a financial instrument with a limited term ceases to exist (also: final fixing).

The due value stated on a (certificated) security (also: par, par value).

The omega measures the percentage change in an option when the value of the underlying changes by one per cent (also: leverage, gearing).

In the case of options (unlike futures) one party (the purchaser) has the right to choose whether or not to enter into the agreed transaction. The seller must comply with the purchaser’s wish. He is also referred to as the writer. In the same way as for futures, the underlying, the term and the strike price are specified in advance. A distinction is drawn between call and put options.

A value that indicates, in per cent, how much more expensive it is to acquire the underlying via an option than through a direct investment in the underlying.

A transaction that is agreed and settled individually between two market participants.

Nominal value, or the price that corresponds to the nominal value. In connection with the issue of a structured product, this term denotes an issue at a price of 100 per cent.

Figure in per cent which indicates the extent of the investor’s participation in the performance of the underlying at maturity.

Unlike active instruments, passive investment instruments aim to replicate the benchmark as exactly as possible, and at low cost.

To make payment for securities that are subscribed on issue.

Graphic representation of the payment profile for a derivative at maturity. Profit and loss are shown in relation to the price of the underlying at maturity.

Expresses the development in the value of a financial product or portfolio within a specified period.

In this case, the index calculation takes account of dividend payments in addition to price changes. The dividend payments are reinvested proportionately in the components of the index (also: total return index, opposite: price index).

Only net changes in price are included in the calculation for this type of index. Dividend payments are disregarded (opposite: performance index).

Starts on issuance of a structured product and ends when it has been paid up. The subscription period also falls within this time.

An option that entitles but does not oblige the purchaser to sell a specified quantity of an underlying at a pre-defined strike price, by or on a specified date (also: option to sell).

Rating agencies (such as Standard & Poor’s or Moody’s) classify a debtor's creditworthiness on the basis of standard criteria and procedures.

Repayment of a payment made previously, in particular repayment of a structured product at maturity.

This indicator shows the absolute change in the value of the derivative if the risk-free interest rate changes by one per cent.

The interest rate that must be paid for capital that is free of credit risks. In financial-market theory, swap rates are used as an approximation.

Starts when the structured product is paid up and ends on its maturity. During the secondary market, the products can be bought and sold.

Assets created for the purpose of collective investment which are not included in the insolvent estate of a financial institution in case of bankruptcy.

Difference between purchase and selling prices (also: bid-ask spread).

Statistical measurement indicating the spread of a random variable around its mean value.

Selecting equities on a specific market with the goal of beating the relevant benchmark.

The price determined on conclusion of a deal, at which the holder of an option has the right to purchase the underlying (call option) or to sell it (put option) (also: strike, subscription price).

A financial product in which financial investments and derivatives are combined, linked together to form a standalone product and certificated as a security.

Period in which structured products can be subscribed and therefore obtained as per their issue conditions. Usually ends on the day of issue. In practice, the subscription period may also continue for longer, in which case the term used is “subscription period at market prices”.

Indicates how many units of the underlying can be subscribed or sold via the derivative financial instrument.

Interest rate formed in the highly liquid trade in interest-rate swaps between banks. Often used as an approximation of the risk-free interest rate.

In case of complete diversification, the residual risk that still remains is the systematic risk. Causes of risk may include political events, natural disasters or supply-and-demand shocks (also: market risk).

Contains all the information about a structured product. It is drawn up by the lead manager and made available to the investors.

Measures the reaction of an option to changes in the residual term.

Choice of the appropriate time for decisions to buy and sell on the market, with the aim of beating the pre-defined benchmark.

An underlying is a financial instrument on which a derivative financial instrument is based. Examples include securities, currencies, indices, commodities and interest rates, etc.

Security-specific risk that can be eliminated by adequate diversification of the portfolio (opposite: systematic risk).

Identification number for securities in Switzerland (international: ISIN code).

Date when an investor must pay for the purchase of a security or on which he is credited with the proceeds of its sale. Usually three days after conclusion of the deal.

The value-at-risk is a measurement of risk. It describes the loss that will not be exceeded, with a defined probability (e.g. 95 per cent) within a specified holding period.

Indicates the absolute change in the price of the option, in relation to the change in the volatility of the underlying.

Volatility denotes the historical or implicitly expected fluctuations in return from the underlying.