Weekly Wrap Up

19 September 2016

Rationale: Not enough shopping?

Last week, UK retail sales declined -0.2% in August, less
than economists forecast (-0.4%), it follows the strongest
July increase in 14 years

Qualified investors with a rather sceptical view on British

retailers could be interested in the following product

The bearish auto callable reverse convertible is built on a

The Brexit economic repercussion might only take effect in 12 months horizon. Qualified investors will receive a
3 years, according to the British Chamber of Commerce, guaranteed coupon of 9.50% p.a. and benefit from quarterly
forecasting a cost of 43.8 billion over the next 3 years
exits if the best of (BO) stock enters into a bear market.
Capital is at risk if BO stock up by 30% or more from
Most of British retailers could still be under pressure in the current level. The product offers an exit opportunity prior
next few months (Next -31.14% YTD, Sainsbury -7.15% to Christmas time
YTD and Marks & Spencer -29.84% YTD)
The graph illustrates Next, Marks & Spencer and Sainsbury
performance over the last five years

Product Suggestion: 9.50% p.a bearish auto callable reverse convertible (Best of)
Product parameters:

How does the product work:

Currency: GBP
Maturity: 1 Year
Underlyings (BO): MKS LN Equity,
NXT LN Equity, SBRY LN Equity
Guaranteed Coupon: 9.50% p.a
Frequency: Quarterly
Capital barrier: 130% upper barrier (EU)
Strike level: 100%
Trigger level: 100% (BO)

Scenario 1: After 3 months, BO stock down -50%, early

redemption, qualified investors get 100% capital back +
9.50% coupon p.a
Scenario 2: After 6 months, BO stock up +5%, qualified
investors get 9.50% coupon p.a, no early redemption
Scenario 3: At maturity, BO stock up 20%, qualified
investors get 100% capital back + 10% coupon p.a
Scenario 4: At maturity, BO stock up 40%, qualified
investors get 60% capital back + 10% coupon p.a

Profile: Aggressive

Rationale: Apple vs Samsung : The divergence

Both Apple Inc and Samsung have been competing over
the last years, last month seems to have favoured Apple
Inc
Apples share has risen 11.43% last week, on continued
optimism over the prospects for its new iPhone (with
Christmas coming along the way). US mobile operators
said that orders for the iPhone 7 were four times higher
than the previous launches
In the meanwhile, Samsungs share price suffered a loss
of -7.06%. Samsung has to recall 1 million galaxy note 7
across the US. As a result, the spread between the two
shares has widened (see graph below)

Qualified investors interested in benefiting from this

decorrelation, with a bullish view on Apple and bearish on
Samsung could invest in the following strategy. The
spread structure allows investor to take advantage on the
widening spread between Apples and Samsungs share
prices
This short-term investment (3 months), denominated in
USD offers a 3x leverage. This very aggressive product
includes a 75% stop-loss
The graph illustrates Apple and Samsung performance
over the last five years

Product Suggestion: Spread structure on Apple & Samsung

Product parameters:
Currency: USD
Maturity: 3 months
Underlying: long Apple (AAPL UQ), short Samsung
(SMSN LI)
Strike: 67%
Issued price: 33.70%
Stop-loss: 75%
Leverage: x3
Spot ref: Samsung: 673 USD
Spot ref: Apple: 114.62 USD
Basket value: 100% + Apple performance - Samsung
performance
Basket value day 1: 100%
Payout: Basket value - Strike
Profile: Ultra-Aggressive

How does the product work:

Scenario 1: At any time, if Apple down 20%, Samsung up
10%, basket value 70%, stop loss event at 75%, investors
get 24% capital back
Scenario 2: At maturity, if no previous stop-loss event, no
unwind, Apple +10% Samsung down -15%, basket value is
125%. Investors get back 58%, profit 72%
Scenario 3: At maturity, if no previous stop-loss event, no
unwind, Apple +10% Samsung up 15%, basket value is
95%. Investors get back 28%, loss -16%

Chart of the Week: Fed and Libor, a charming couple

FED is meeting on Tuesday, with still 3 more meetings before year end. According to Bloomberg, the FOMC forecasts
an increase in FED rate for the next three months, up to 1.50%.
Ms Brainard intervention on the 13th of September pushed the rate up (see graph)
The USD 3 months Libor is up almost a quarter point since June and the SEC's money market fund reforms come into
effect next month, which will probably cause a rise in the Libor rate, which is positively correlated with the FED rate.
Qualified investors with expectations of rising interests rate could consider the enclosed investment opportunity
Investment suggestion: Boosted digital note/ USD / 3 months / 3M USD Libor rate / 80% Capital protected / Upper
barrier 1.15% / Lower level 1.00% / Libor ref 0.85% / Payout: At Maturity, if 3M USD Libor is <1.00%, investors get
80% capital back, if it is >1.00% and <1.15% investors get 103%, if it is >1.15% investors get 135% / Profile:
Aggressive

Disclaimer: this document, the trade ideas and indicative values set out herein have been prepared by Profin Partners
for discussion and/or information purposes only and are being provided to you based on our reasonable belief that you
are a sophisticated institutional investor that is capable of assessing the merits and risks of the transactions and financial
matters discussed herein. This document is a financial promotion. ProFin Partners, 100 New Bond Street, 4th
Floor Mayfair, London W1S 1SP Tel/Fax: +44 20 8050 5292 contact@profinpartners.com. Authorized and regulated
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defined by the Financial Conduct Authority. Derivative products should only be executed by investors who have a full
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