Macquarie Hi-Notes

[markrmau]

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]

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]

http://www.macquarie.com.au/emg/hinotes/hinotes_home.htm?source=personal_portal_placeholder

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.

 

[Bin57again]

Where can I find out more about sold put options?