Why Leveraged Products?
In uncertain market conditions, investment and leveraged products offer a way to safeguard one’s portfolio against price losses. These strategies are especially useful in periods of high volatility to protect the portfolio while simultaneously benefiting from market fluctuations.
Leveraged products such as Short Knock-out Options and Put Options are popular instruments for hedging positions. They allow investors to speculate on falling prices or to hedge existing positions in the short term.
- Short Knock-out Options: These products are ideal for speculation on falling prices. They have a base price and a knock-out barrier. If the market falls below the barrier, the value of the option may rise, leading to profits.
- Put Options: These options give the buyer the right to sell a stock at a predetermined price. They are particularly useful for limiting the risk of price losses in individual stocks.
Examples of Underlyings
- DAX: Short Knock-out Options on the DAX provide a means to speculate on falling prices of the German benchmark index or hedge existing positions.
- Hensoldt: Put Options on stocks like Hensoldt can be sensible to limit the risk of price losses in high-valued stocks.
Strategies for Uncertain Markets
During periods of high uncertainty, such as those resulting from geopolitical tensions and economic turmoil, investors can hedge their portfolios with leveraged products. Institutional investors have been using such strategies for a long time, while retail investors often utilize these options less frequently.
Commodities as Crisis Protection
In addition to leveraged products, commodities like Gold and Antimony can serve as part of a crisis protection strategy. Gold is traditionally viewed as a safe haven in uncertain times, while Antimony is gaining importance due to its strategic significance in modern technologies and the defense industry.
Advantages and Risks
- Advantages: Leveraged products offer the opportunity to protect the portfolio and profit from market fluctuations. They are flexible and can be applied to various markets.
- Risks: Leveraged products are associated with high risks as they hold the potential for significant gains, but also substantial losses. Investors should be aware of the risks and plan their investments carefully.
Conclusion
Investment and leveraged products provide investors with an effective means to hedge their portfolios in uncertain market conditions. By combining leveraged products with strategic commodity investments, investors can diversify their portfolios and better prepare for times of crisis.