The last three months of 2018 saw severe losses in all major indices and many stocks. This type of market cycle has a significant effect on the structured product market. It will affect demand for future issuance but also can cause challenges and risks for traders managing existing positions.

The S&P 500 index suffered major falls in the last quarter of the year. Although it is normally less volatile than other mainstream regional indices on 16 different days in 2018 it suffered falls of 2% or more. By comparison, the Eurostoxx 50 only had six such days. Large falls cause more problems because of the need to rebalance hedges quickly as the market moves. Any product barrier levels that are approached have the potential to cause losses if the market suddenly gaps down and the trade

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