Outperformance certificate

Outperformance certificates offer investors disproportional gain compared to a direct investment in a share, commodity or index. Classic outperformance certificates have a strike price and a participation rate. Both features are determined at the certificate’s issue. As soon as the defined price level is reached, the price of the certificate responds to the price development of the underlying with a participation rate of more than 100 percent. In return, investors are not paid a potential dividend. It is paid to the issuer of the certificate instead. The higher participation rate also applies in case of losses. Below the strike price, investors face no higher risk than with a direct investment. At the end of maturity, the investor is paid at least the price of the underlying for each certificate.

Sub-types are protect outperformance and spread certificates, which feature additional safety levels. Typical names used by issuers are: express, sprint, spread, sidestep, double chance and touchdown (certificate).