Upside Participation Note on Alibaba + Alphabet Class A

Stock of tech companies got hit in past weeks on no real financial developments or performance issues, except the election of Donald Trump as the president of United States.

But tech is a big business and it will find its way to thrive inside Trump regime. This is why the sell off in tech is likely to be short term panic, rather than a real worry.

Clients at private banks can invest in Upside Participation Note in anticipation of rebound for Alibaba & Alphabet.

Upside Participation Note details:
Underlying: Alibaba + Alphabet Class A
Tenor: 6 months
Strike: 95%
Participation rate: 155%

Risk to client is to buy worst performing stock at 5% discount from entry price.

If both stocks are above entry level at maturity, every 1% up from worst performance stock, client will gain 1.55%.

Client can choose to unwind the note before maturity date but participation rate will be lower than stated 155%.


Scenario:
Say the client invests USD200k into this note.
Worst performing stock is up 10% at the end of 6 months, the return to the client will be 15.50% (10 x 15.50%).
This means profit to client will be USD31,00 (15.50% x USD200k).

In an upside participation note, client will be earning capital gain with a multiplier.


Details of Update Participation Note:
Trade date: 16Nov16
Valuation date: 30May17
Alibaba initial price: 91.5400
Alphabet initial price: 770.49
Alibaba strike price: 86.9630
Alphabet strike price: 731.9655
Participation rate: 155%
Notional: USD100k


Below shows the chart of Alphabet and Alibaba with their 95% strike price: