What is R-ELN?
It is a type of ELNs with an investment period of 1 - 3 months, which allows you to earn a higher return than general notes investment. However, your return will be based on the underlying asset, investment horizon, and strike level.
Reverse ELN or R-ELN is a short-term investment product that applies to take benefit of the investor holding stock. Investors will gain return in the form of selling particular stock and earn higher yield in anticipation of selling shares at a premium.
Why R-ELN?
- Apply a Covered call strategy to exploit benefit of the current equity portfolio.
- Higher annual return than other fixed-income securities with your chosen risk-level.
- Suitable for the market with unclear direction or sideway-up.
Who is suitable for R-ELN?
- Active Investors who want to adjust their portfolio to suit the market conditions.
- Investors who want to generate additional returns in the portfolio and accept to sell their underlying.
- Investors who want to generate a high return with risk tolerance on opportunity loss (such as to cut loss during stock downtrend or limited capital gain during a stock uptrend).
Maximum profit and loss for R-ELN
- Highest Profits = Yield depending on your chosen risk-level
- Highest Losses = Loss opportunity to exercising stock
Calculation Examples
After the investor has opened an ELN account, the first thing investor needs to know before start investing in ELNs must be the prices and yields of our products. Investors can follow up on the indicative price sheet of R-ELN and seeking additional advice from the investment advisor.
Pricing Sheet
| Pricing Sheet : R-ELN | |||
|---|---|---|---|
|
Trade Date |
18 August 2020 |
Protected Level (%) |
None |
|
Issue Date |
20 August 2020 |
Notional Amount |
3,008,400 Baht |
|
Valuation Date |
16 September 2020 |
Settlement Method |
Physical / Cash Delivery |
|
Maturity Date |
18 September 2020 |
No. of holding days |
29 Days |
| Underlying | Spot Price (THB) | Strike Level (%) | Strike Price (THB) | Annualized Yield (Before Tax) | Minimum of shares for purchased | Pay Redemption Amount before Tax (THB) |
|---|---|---|---|---|---|---|
| AAA | 92.00 | 104% | 95.68 | 21.5552% | 32,700 | 3,128,736 |
| 105% | 96.6 | 18.6907% | 3,158,820 | |||
| 107% | 98.44 | 13.5382% | 3,218,988 |
Remark:
Spot Price is the AAA share close price in the day before (17 August 2020). The example price sheet will only be use for calculation reference. It is not the actual price that investor will get. Strike level, Annualized yield, and Issue price are the only factors that investor will get from the pricing sheet. (These factors do not depend on the spot price.)
When you start investing in ELN, we will call this date “Trade Date”
| 1. Trade Date (18 August 2020) | |
|---|---|
| Assume that you choose AAA stock at 104 % Strike level, and Spot price at 92 Baht. In Trade date, investor needs to transfer their holding stock of 32,700 Shares to ELN account. | |
| Underlying AAA | 32,700 Shares |
| Spot Price | 92 Baht |
| Notional Amount | 3,008,400 Baht (92 x 32,700 Shares) |
| Strike Price | 95.68 Baht (104% of Spot Price) |
| Annualized Yield (Before tax) | 21.5552% |
| Return (Before tax) | 53,298.63 Baht [(3,008,400 x 21.5552% x 30) / 365] |
| No. of holding days | 29 Days |
| 2. Issue Date (20 August 2020) is Trade Date 2 Working Days | |
|---|---|
| AAA 32,700 Shares at Notional amount of 3,008,400 Baht are transfer and ready for R-ELN investment | |
| Underlying AAA | 32,700 Shares |
| Notional Amount | 3,008,400 Baht |
| 3. Valuation Date (16 September 2020) is Maturity Date 2 Working Days | |
|---|---|
|
There are 2 possible cases for your return |
|
|
Case 1 ( AAA > 95.68) Spot Price > Strike Price |
Investor receive 3,128,736 Baht in cash (95.68 x 32,700 Shares) and Return 53,298.63 Baht in cash |
|
Case 2 ( AAA < 92) Spot Price < Strike Price (such as AAA = 93 baht) |
Investor receive 32,700 AAA Shares and Return 53,298.63 Baht in cash |
| 4. Maturity Date (18 September 2020) | |
|---|---|
| Investor receive return according to the case in Valuation Date | |
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Disclaimer:
The Structured Note is offered to High-Net-Worth investors (HNW), Ultra High-Net-Worth (UHNW) and institutional investors (II). It is a high-risk and complex product. The value of the Structured Note depends on uncertain factors. Investors may lose the principal in whole or part or receive lower-than-expected returns. Structured Notes do not have a secondary market for trading and have transfer restrictions as specified by the terms and conditions. Please understand the product's characteristics, the conditions of return, and the risks involved, and seek additional advice before making an investment decision.