Bankgesellschaft Berlin plans to use over-the-counter equity call options to structure two guaranteed products aimed at retail investors looking to hedge their downside exposure. Gerald Klein, assistant director in the structured products department in Berlin, said these products are a reply to investors' demands for protection against a market crash while maintaining exposure to indices as part of long-term savings plans.
Klein said the products, which will be launched in the middle of next month, will give clients exposure to the Dow Jones Euro Stoxx 50 or the DAX. Investing in the note is equivalent to buying zero-coupon bonds and three-year over-the-counter call options on the index. The options the bank buys will in turn be implicitly sold to investors in the product. Klein said the bank is not tempted to offer a worst of several indices product or tamper with the maturity of the zero-coupon bond to give more participation in the index because retail clients want transparent products.
The notes will be marketed through the bank's branches and have a minimum investment of approximately EUR5,000 (USD4,487).
