[sgbuffett]

Wow using derivatives investment banks can get really creative ...in this case the product has unlimited downside and limited upside but entices the customer by selling at a price below the market at the initial stage.

Using options the product designer can created exotic combinations of eclectic products ...the customer has not ability to understand ....

[dynamite]

Sell you a product if earn give you a bit, if lose, you foot the bill.

[sgbuffett]

Below is one of the products sold to the woman known as FCN.

1. You commit to a buy a basket of stocks ata fixed strike price lower than market price ..

2. If stocks remain above strke price tlyou get back principal and a fixed return.

3. If any of the stock goes below strike price you have to buy the one that fell the most below strike price at the strike price ....to lock in a paper loss

The concept is same as another concept called selling cash covered puts..which is a down right rotten idea.

The FCN is just an amplified version by taking a basket of stocks instead of one stock.


https://www.dbs.com.sg/private-banking/i...upon-notes