Small print behind protected products

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By Jane Wallace Guaranteed stock market bonds and Isa products are still taking large amounts of ris...

By Jane Wallace Guaranteed stock market bonds and Isa products are still taking large amounts of risk to provide high headline income and growth which investors may not fully understand. The price of options (the derivatives which underlie the product to act as insurance) is determined generally by two factors, the future volatilty of the index, measured as 'implied volatility', and interest rates. The more volatile an index or stock but provides the cheaper the option is attached to it. Using an index such as the volatile US technology Nasdaq index will allow providers to play to the cu...

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