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| Backtesting | This is the process of looking at how a product would have performed in the past, based on actual historical data for the Underlying. Whilst it is not a prediction of the returns that can be achieved with a product, it can provide an indication of how the product might perform in the future, assuming that the future performance of the Underlying is similar to its historical performance. However, there is no guarantee that the future performance of an underlying will be similar to its past performance and therefore the results of backtesting should not be relied upon by investors to make investment decisions. |
| Back to back product | This is the term sometimes used to describe a product in which the investment is split between two separate elements. Typically one element is a deposit of a one year term paying a high fixed rate and the other element is a structured product linked to some underlying equity market. |
| Basket Option | A basket option is an option for which the underlying is more than one index or share. So for example an option that pays out based on the performance of the FTSE100, DJ Eurostoxx50 and S&P500 would be called a basket option. |
| Banking Day | Days on which commercial banks are open for general business in London, which typically excludes any bank holidays and weekends or days on which the relevant stock exchanges are not functioning normally. Please also see ‘Business Day’. |
| Barrier option | An option which is activated or deactivated once the value of the underlying asset goes above or below an agreed limit. The investor must buy a barrier option at the premium t ¼ 0 without obtaining a guarantee that he or she will actually obtain or retain the right to exercise the option before expiration. The holder frequently receives a small rebate if the option is never activated. |
| Base Prospectus | The legal document that provides the full details about the investment offered for sale to investors. This is different to the Brochure for a product, and you should ask your adviser if you wish to see a copy. Please note that Base Prospectuses are only available for Structured Investments. |
| Bear/Bearish | This is a term used for investors who think the market will fall in value |
| Bermuda option | An option which can be exercised on a number of predetermined occasions |
| Best-of option | A best-of option is an option that is exercisable against the best performing of a given number ofunderlying shares or indices. For example a call option on the best of the FTSE100 and S&P500 would pay out on the index that rose the most during the term of the option. See also Worst-of option. |
| Binary barrier option | A barrier option with a payoff similar to that of a binary option. In the case of knock-in barrier options, we distinguish between two types: at hit: payoff occurs immediately once the instrike is reached; at expiry: payoff occurs once the life of the option expires. |
| Binary option | An umbrella term for cash-or-nothing options and asset-or-nothing options |
| Bond | A debt instrument, where the issuer promises to repay the holder on a fixed future date together with an interest amount (also knows as Coupon).
The fixed capital return besides the nominal amount which investors receive at maturity provided a predetermined barrier has not been triggered during investment. |
| Binary option | An umbrella term for cash-or-nothing options and asset-or-nothing options |
| Bull Bear | A return based on a percentage of the rise, as well as a percentage of the fall, in the underlying. |
| Bull spread | This is the name given to an option trading strategy that is designed to benefit from a rise in the stock market. The strategy involves buying a call option and selling another call option with a higher strike price. |
| Bull/Bullish | This is a term used for investors who think the market will rise in value. |
| Business Day | Days on which commercial banks are open for general business in London, which typically excludes any bank holidays and weekends or days on which the relevant stock exchanges are not functioning normally. Please also see ‘Banking Day’. |