8. Intrinsic Value of CBBCs

  • Theoretical price of CBBCs = Intrinsic value + Funding cost
  • CBBCs are in-the-money instruments with an intrinsic value greater than zero
  • Take Bull CBBCs as an example: assuming other factors remain unchanged, if the price of the underlying asset rises, the bull contract's intrinsic value will increase, leading to a price increase of the bull contract (see chart below), and vice versa. On the contrary, if the price of the underlying asset tumbles, the bull contract's intrinsic value will decrease, leading to a price drop of the bull contract.

The above is a hypothetical case of CBBC for the purpose of illustration only. Past performance is not indicative of future results. The price of the structured products may fall in value as rapidly as it may rise and investors may sustain a total loss of their principal invested.


*Turnover of a warrant or CBBC has no direct relationship with the product's price. Investors should not use turnover as the only indicator when choosing a warrant or CBBC.