DCSIMG Asset Management | DenizBank

DUAL CURRENCY DEPOSIT (DCD): (ADDITIONAL RETURN ON DEPOSIT INTEREST)

Client gets a certain amount of premium based upon the her/his selling the right of purchasing or selling any type of currency at a certain maturity and strike. Also the entire transaction amount is tied in a time deposit until maturity, thus the client gains options premium in addition to deposit interest.

Sample Transaction: (the client has USD)

Date of Transaction 06/01/2012
Amount 1.000.000 USD
Maturity 06/02/2012
Strike 1,6000
Spot Market Rate 1,8850 USD/TL
Target Price 1,9500
Options Premium* % 9,44 (9.440.-USD) (Net: 8.496.-USD)
Deposit Interest %5,25 (Net: %4,46)
Total %12,95 (Net)
*10% withholding tax is valid for retail clients and sole proprietorships.
  • If USD rate is above 1,9500 at maturity;
    Denizbank exercises the option and receives USD 1.000.000 from client at 1,9500 USD/TL level.
  • If USD rate is below 1,9500 at maturity;
    Denizbank does not exercise the option. The option premium is transferred to the client account in the next business day of the transaction. Client receives deposit interest at the maturity.
    • For clients who assume USD/TL rate will not increase or who wish to convert their currency into TL at an acceptable level.
    • This can be applied to EUR/USD and to all other currency pairs.

Sample Transaction 2: (the client has TL)

Date of Transaction 06/01/2012
Amount 1.000.000 tl
Maturity 06/02/2012
Spot Market Rate 1,8850 USD/TL
Target Price 1,8800
Options Premium* %1,18 (1.180.-TL) (Net: 1.062.-TL)
Deposit Interest %12,00 (Net: %10,20)
Total %11,26 (Net)
*10% withholding tax is valid for retail clients and sole proprietorships.
  • If USD rate is above 1.8800 at maturity;
    Denizbank does not exercise the option.
  • If USD rate is below 1.8800 at maturity;
    DenizBank exercises the option and sells USD equivalent to TL 1.000.000 to the client at 1.8800 USD/TL level. The option premium is transferred to the client account in the next business day of the transaction. Client receives deposit interest at the maturity.
  • For clients who assume USD/TL rate will not decrease or those who wish to convert their TL into USD at an acceptable level.
  • This can be applied to EUR/USD and all other currency pairs.

EXOTIC OPTIONS (WITH BARRIER):

Sample Transaction 1 (KNOCK-IN):

Date of Transaction 06/01/2012
Amount 1.000.000 USD
Maturity 03/01/2013
Observation Period 06/01/2012 – 03/02/2012
Spot Market Rate 1,8850 USD/TL
Target Price 2,2500 USD/TL
Knock-In 2,000 USD/TL
Options Premium 8.500 USD
  • If the USD/TL rate does not touch 2,0000 during the observation period the option shall be cancelled.
  • If the USD/TL rate does touch 2,0000 during the observation period at any time;
    • At maturity (03/01/2013) as of 14:00, if the spot rate is above 2,2500 USD/TL, the bank exercises the call option sold by the client and buys USD 1.000.000 from the client at 2,2500 USD/TL.
    • If the spot rate is below 2,2500 USD/TL at maturity as of 14:00, the option is not exercised.
  • The options premium is transferred to client account in the next business day of the transaction.

Sample Transaction 2 (KNOCK-OUT):

Date of Transaction 06/01/2012
Amount 1.000.000 USD
Maturity 06/01/2013
Observation Period 06/01/2012 – 03/02/2012
Spot Market Rate 1,8850 USD/TL
Target Price 2,2300 USD/TL
Knock-out 1,9500 USD/TL
Options Premium 11.000 USD
  • If the USD/TL rate touches 1,9500 during the observation period the option shall be cancelled, if not the option shall be valid.
  • If the USD/TL rate does not touch 1,9500 during the observation period at any time;
    • If the spot rate is below 2,3000 USD/TL at maturity as of 14:00, the option is not exercised.
    • The options premium is transferred to client account in the next business day of the transaction.
  • At maturity as of 14:00, if the spot rate is above 2,3000 USD/TL, the bank exercises the call option sold by the client and buys USD 1.000.000 from the client at 2,3000 USD/TL.

Disclaimer:

This document was prepared by the Treasury Sales Group for informative purposes and does not put forward any investment recommendations. Figures stated in this document are only samples and do not carry any commitment. Products mentioned in this document are subject to risks at various rates. Loss of money may be incurred as a result of possible price fluctuations in the market. It must be known that transactions made in FX type carry currency risk, that depreciation may be incurred in TL/FX currency types as a result of currency fluctuations, that governments may restrict foreign capital and foreign exchange movements and bring new and/or additional taxes and that buy-sell transactions may not be performed in time. The promoted products may not be appropriate with your financial situation and risk/return preferences. Thus, giving an investment decision only based on information provided herein may not yield the results of your expectations. Our bank cannot be held liable for the results of the investment decisions taken based on these information.”

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