Learn About Derivatives and Equity Linked Notes.

DERIVATIVES:

Derivative ⇒ A derivative is a financial instrument that derives its value from the performance of an underlying asset.

Long position ⇒ the purchaser of the derivative.

Short position ⇒ the seller of the derivative.

Option ⇒ a derivative contract in which the buyer, pays a sum of money to the seller & receives the right to either buy or sell an underlying asset at a fixed price swap ⇒ an over-the-counter derivative contract in which two parties exchange a series of cash flows.

Call option ⇒ provides the right to buy.

Put option ⇒ provides the right to sell.

American-style option ⇒ can be exercised before maturity.

European-style ⇒ can be exercised only at maturity.

Exercise price ⇒ fixed price at which underlying asset can be purchased.

Option premium ⇒ sum of money paid by the option buyer.

In-the-money option ⇒ when option value is positive for buyer &

St >X where St price at maturity X = exercised price.

Out- of money = St < X At the money = St = X

Equity-Linked Notes

Unless otherwise specified in the relevant terms supplement, for equity-linked notes, the amount you will receive at maturity is based on the performance of the underlying asset and any applicable maximum payment at maturity as described below. Unless otherwise specified in the relevant terms supplement, you will receive a cash payment at maturity per security calculated as follows: stated principal amount + supplemental redemption amount, subject to the maximum payment at maturity, if applicable For equity-linked notes, if the final value is less than or equal to the initial value, the supplemental redemption amount will be equal to $0, and you will receive no return on your investment at maturity.