Synthetic Derivatives

The term “Synthetic Derivative” refers to derivatives emulating their underlying asset (which could be a stock, a commodity, an index e.t.c.), but at the same time changing essential characteristics like the methodology of  its price price calculation. Synthetic Derivatives are complex products due to the complex methodology used for their price calculation.

As all derivative products, Synthetic Derivatives give traders the opportunity to speculate on price changes without the actual need of owning the traded financial instrument. They are contract-based, meaning you can trade a given number of contracts, and each one of them will correspond to a base amount of the asset in question.

Before trading Synthetic Derivatives, we kindly advise you to get familiar with the Key Information Document, Methodology, as well as the Performance Scenarios in order to obtain a better understanding of all the risks that are inherent in operating such derivatives. Risks that may involve, among others, is the sudden and dramatic change in the asset’s price.

Each Synthetic Derivative has a specific leverage factor, which aims to replicate a multiple of the performance of its underlying asset. In other words, leverage factor is the multiplier by which the leveraged index intends to perform, relative to the parent index.

Synthetic Derivatives are complex and risky products due to the complex methodology behind their price calculation.

Synthetic Derivatives are subject to Corporate Events which may occur under the following circumstances:

• If the value reaches below 50 then a reverse split is carried out on the product.

• If the value closes at greater than 10,000 then a split is carried out on the product.

In case of a reverse split after the adjustment of any transaction, if the position size will be equal to or less than 0.01, then the Company will close the relevant transaction at the last available market rate and will realise the Profit & Loss.

You must read our Key Information Document on Synthetic Derivatives for information related to this product’s methodology, performance scenarios and risks involved.

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