LEVERAGED PRODUCTS

Equity Linked Notes

 

An equity-linked note (ELN) is designed for investors with a bullish outlook. It gives clients the opportunity to buy shares of a selected company at a discount to market price or enjoy higher returns than a direct investment in the underlying stock in the event that the stock price trades sideways.

Reverse equity-linked notes (RELNs) as the name suggests, is designed for clients with a stable or moderately bearish market outlook. It allows clients to utilise existing shares for potentially higher returns by giving them the opportunity to sell their existing shares at a pre-agreed price in the event the market turns bullish or unlock more returns from the stock, especially during periods where the stock does not give dividends.

Why trade this product with CGS-CIMB?

Available offerings for Equity Linked Notes

Client sells a put option, which can enhance the yield of the deposit if the underlying equity price closes at or above the strike price on the valuation date.  Click here for illustration.
Client sells a call option, which can enhance the yield of the deposit if the underlying equity price closes at or below the strike price on the valuation date. Click here for illustration.
Client sells both a call and put option at different strike prices, which can enhance the yield of the deposit if the underlying equity price closes at or above the lower strike. Simply put, it is a combination of both a Bull and a Bear ELN, of which clients can structure to meet their needs.

Support

Over-The-Counter (OTC)

Clients can trade ELN OTC at our CGS-CIMB Securities offices or contact our Trading Representatives to place a trade.
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FAQs

It differs from market to market but typically starts from about USD 200,000.

Only for Accredited Investors.

No, because buying the most common “Bull” ELN is like selling a put option. The maximum loss an ELN investor may suffer is when the stock price drops to zero. The risk involved is the same as buying common stock, and the loss is not unlimited. On the flip side, “Bear” ELNs has an unlimited risk as the stock can go to infinity.

Open an account now

Simply contact CGS-CIMB Securities to request for an account opening pack.

1800 6227272 / (65) 62108453

clientservices.sg@cgs-cimb.com

Download our registration form and mail it to the desired branch with all the enclosures.

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Key Risks

The key risks associated with ELN include the following. It is important to note that the list of risks is not exhaustive.
ELNs  is  a  product  which  derives  its  value  from  the  underlying  equity.  The  yield  enhancement  for  the  investor  in  ELNs  comes  from  the  premium  received  from  underwriting  risk  associated  with  the  price  movement  of  the  underlying.  An  adverse  price  movement  of  the  underlying  can  cause  investors  to  lose  more  than  the  principle  amount  invested. 
A default of the issuer of ELNs can cause the full loss of the principle amount invested. Eg. If the issuer goes bankrupt, the investor loses his initial capital. 

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