HSBC Global Banking and Markets operations around the world
GoGlossary of terms
| Terms | Description |
|---|---|
| American-style option | An option that can be exercised at any time up to and including maturity. |
| Asian call | A product that pays a coupon at maturity based on the average performance of the underlying recorded at different dates against the initial date during the product’s life. The averaging can take many forms including weekly, quarterly and annual averagings. |
| At-the-money | An option that has a strike price equal to the market price of the underlying. |
| Averaging | The levels used in the calculation of the underlying’s starting and/or final level are the arithmetic average over a predetermined period at a predetermined frequency. |
| Call option | An option that gives the holder the right, but not the obligation, to buy a set quantity of the underlying at a given price (the strike price) on or before a specified date (the strike date/exercise date). Call options benefit the holder if the price of the underlying rises. |
| Call spread | An amalgamation of two call options whose combined payout is capped at a predefined level. |
| Capital protected/guaranteed | A product that provides a minimum return at maturity at least equal to the original investment. |
| European-style option | An option that can only be exercised on its maturity date. |
| Growth product | A product that produces a return at maturity based on the performance of the underlying, with no coupon payments during the product’s term. |
| Growth and income product | A product that produces fixed returns during the term of the product and a return at maturity based on the performance of the underlying. |
| Historical volatility | A mathematical measure of the variability of a stock or index over a historical period. The most common form is the standard deviation of daily returns. |
| Implied volatility | The volatility in price a stock or index is expected to have over some future period. |
| In-the-money | An option that has a strike price far below (for a call option) or far above (for a put option) the current market level of the underlying. |
| Income product | A product that produces periodic coupon payments. The coupon payments are often higher than the rate of interest available on fixed-rate deposits. |
| Initial level | The level of the underlying at the start of the investment term. |
| Intrinsic value | A term used to describe the portion of an option’s premium that represents the value the option would have if it were exercised immediately. |
| Out-of-the-money | An option that has a strike price far above (for a call option) or far below (for a put option) the current market level of the underlying. |
| Participation rate | The leverage or exposure of a product to movements in the underlying’s price. A participation rate of 100 per cent would generate a return exactly equal to any rise in the underlying asset. For example, if the underlying rises by 35 per cent, the return would also be 35 per cent. Also known as gearing. |
| Put option | An option that gives the holder the right, but not the obligation, to sell a set quantity of the underlying at a given price (the strike price) on or before a specified date (the strike date/exercise date). Put options benefit the holder if the price of the underlying falls. |
| Put spread | An amalgamation of two put options whose combined payout is floored at a predefined level. |
| Target return | A feature that means the structure will mature early once a predetermined aggregate target coupon level is reached. |
In Euromoney 's Awards for Excellence 2009, HSBC won Euromoney's premier award Best Global Bank.
Read more.