Options
Put Options
Put options are not structured products per se, but one of the basic element with which structured products are built. The buyer of a put option has the right (but not the obligation) to sell an underlying asset (a stock, a commodity or any other asset) at a predetermined price.
Call Options
Call options are not structured products per se, but one of the basic element with which structured products are built. The buyer of a call option has the right (but not the obligation) to buy an underlying asset (a stock, a commodity or any other asset) at a predetermined price.
Skew - Smile
Financial options are influenced by many factors, among others implied volatility. Implied volatility expresses the level of uncertainty that the market participants attribute to a risky underlying asset for a given maturity in the future. A higher uncertainty will result in a higher volatility, which in turn will increase the price of the options. The reverse is true for less uncertainty. An observable fact in the market is that options on an identical asset for a given maturity have different volatilities. This phenomenon is called the smile or the skew.