Structured Deposit

intermediate
capital protectiondepositoption overlay

A bank deposit combined with an embedded option. Your principal is fully preserved while gaining potential upside exposure through the option component.

Parameters

113.5
50200
112.43
50200
1.75%
0.1%10%
3mo
1mo24mo

Payoff at Expiry

parStrike 113.5%247k255k263k272k280k288k96%101%107%112%118%124%129%Final Level (%)$250,000
112.43
101.18700000000001123.67300000000002
Total Payoff
$250,000
Option Gain
+$0
Deposit Interest Forgone
-$1,094
Net vs Deposit
WORSE

Scenario Analysis

Understanding Structured Deposits

What is a Structured Deposit? (Section 7.2)

A structured deposit is a debt obligation of the bank. The principal must be repaid in full at maturity (in Singapore). However, structured deposits are NOT covered by the Deposit Insurance Scheme. The return is linked to the performance of an underlying financial instrument.

Textbook Example: Deposit with Long Call (Section 7.2.2)

USD/JPY Spot: 112.43 | Strike: 113.50 | MM Rate: 1.75% p.a.
Minimum: USD 250,000 | Tenor: 3 months
Bank uses the deposit interest to buy a 3-month USD call/JPY put option.
Client forgoes deposit interest in return for potential FX gains.

Payoff Formula

Where N = notional, S_T = final price, K = strike. Principal always preserved.

Client Suitability (Section 7.1.1)

  • Risk appetite — ability and willingness to take risk
  • Experience — must understand features and risks
  • Liquidity needs — early redemption may result in losses
  • Investment horizon — value realized at maturity
  • Product risk — features can augment payoff profile