StayLo- To play the stability or the down trend, while benefiting from the passing of time.
Win 100 € at maturity if the closing price of the underlying has never exceeded the barrier down. In case of crossing, the StayLo is deactivated and its value is null.
Example
The Alcatel share quotes 10 ?. You anticipate that this share will never reach the limit price of 11 ? at closing in the next 4 weeks. You buy 60 ? a StayHi option on Alcatel with a barrier at 11 ? and a maturity in 4 weeks. If Alcatel never closes beyond 11 ?, you win 100 ?. If on the contrary Alcatel exceeds 11 ? at closing you loose your initial investment, that is 60 ?. Please note that during the buy period you may also at any time resiliate your contract.
1. Relevant scenario
2. Trading with technical analysis
The StayLo allows for playing the non occurence of the price increase. Its reactivity is maximal when underlying price is near the barrier; as a counterparty the deactivation risk is higher. If the undelying price remains stable, the StayHi appreciates because the probability of reaching the barrier diminishes : we say that the "time value" increases. The increase of the time value accelerates as the maturity approaches.
Underlying price decrease
Passing of time
Volatility increase
The technical analysis is the study of the past evolution of the underlying mainly based on price charts in the prospect of predicting the trend (increase, decrease or consolidation), ampitude and time : support and resistance levels, patterns. The StayLo is adapted for benefiting from a consolidation phasis, notably by picking a barrier slightly greater than the support level.
Other products to gain from falling or stable quotes