The article introduces ELNs and highlights key points investors should keep remember when trading ELNs. In addition, it explains how investors can use derivatives to structure their own ELNs.
The authors describe ELNs as investment instruments that give relatively risk averse investors exposure to the volatility of the equity markets.
"ELNs may be structured by individual investors by employing bills/notes in the local debt market and HSI Options or any of the 31 Hong Kong stock options traded on HKEx's exchanges," explain the authors. "Investors are strongly advised to do their homework with regard to the stock the bill/note is linked to, to balance their risk and reward expectations."
