I thought I'd put this in beginners lounge in case beginners are lured into Mac banks advertising program. However, these hi-notes are actually a derivative trade.
Mac bank is pushing a thing called hi-notes. This is actually a fancy name for a 'sold put option'. If you don't know how to put a value on a sold put option, perhaps you shouldn't invest in mac bank hi-notes until you do.
Fab
25th-January-2007, 11:17 AM
I thought I'd put this in beginners lounge in case beginners are lured into Mac banks advertising program. However, these hi-notes are actually a derivative trade.
Mac bank is pushing a thing called hi-notes. This is actually a fancy name for a 'sold put option'. If you don't know how to put a value on a sold put option, perhaps you shouldn't invest in mac bank hi-notes until you do.
Can you explain how these hi-notes work?
markrmau
25th-January-2007, 12:28 PM
http://www.macquarie.com.au/emg/hinotes/hinotes_home.htm?source=personal_portal_placeholde r
Basically, mac bank is sucking people into thinking that it is a good deal if they get a 15%p.a. return on a short term deposit.
In a nutshell...
Reward:
You select a share. Get a 15% return on your deposit.
If the share is above your 'entry price', you keep your 15%.
Risk:
If the share is below your 'entry price', you keep your 15% but are stuck with the shares as well (or pay the difference).
A bit more mumbo jumbo in the detail, but that is all it is in essence - naked selling puts.
