Tuesday, August 31, 2010

Callable Bull and Bear Certificates – Knowing the product

This article appeared in Capital page of The Edge Malaysia, Aug 8-14, 2010

From the previous article, we now understand that Callable Bull and Bear Certificates (CBBCs) in Malaysia are actually a product of exotic barrier options. In this article, we examine the key features of this product and have the opportunity to work on some examples.

Essential features of a CBBCs
There are many useful sites including Bursa Malaysia that explain the dynamics of CBBC, but I find the Hong Kong Exchange site, (http://www.hkex.com.hk/eng/global/faq/cbbc.htm) the finest as it enables a layman investor (almost) to understand the product.

The key features of a CBBC are discussed below and at the same time, these features are compared to its close neighbour, structured warrants.