The Spanish Exchange today began to trade the first Turbo warrants, which have been issued by BNP Paribas Arbitrage Issuance B.V (BNP Paribas). The issue comprises 8 Turbo Call and 8 Turbo Put warrants on the IBEX 35®.
These products offer the possibility of bringing forward the expiry date with respect to that set in the terms of the issue. This facility is linked to the setting of a barrier, whereby if the price of the underlying asset hits or exceeds this barrier the expiry date for the Turbo Warrant is brought forward.
Turbo Warrants carry high degree of leverage, which is manifest in its premium (that is, the price of the Turbo Warrant). Furthermore, the trend in its underlying asset will govern its price movements rather than its volatility or the time that passes until its expiry date.
Turbo Warrants are traded on the Spanish electronic trading system – Sistema de Interconexión Bursátil Español (SIBE) - on the Warrant, Certificates and Other Products s market segment, under the heading “Other Products”.
As to Turbo Call warrants, the early expiry date will kick in if and when the price of the underlying asset reaches a level that is “lower or equal to” the barrier set in the terms of the issue.
With regards to Turbo Put, the early expiry date will come into play if and when the underlying asset is “higher or equal to” the barrier set in the terms of the issue.
When the foregoing conditions are met the expiry date for the Turbo Warrants will be brought forward and they will be delisted.
