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A strong acceleration ... but without an airbag

Like warrants, turbo certificates are equity securities that enable investors to take a position on the price of an underlying financial asset (a stock, a stock index, a commodity, a currency, etc.) without having to hold the asset. As these are securities issued on the market by an issuer, their value is known every day. They are therefore identifiable securities in the same way as shares with an ISIN code. 

Like a call option, a Turbo call gives the holder the right to buy the Turbo's underlying security at a predetermined date and at a predetermined price. If the investor expects the price to fall, a Turbo Put gives the right to sell the underlying asset at a predetermined price. 

The difference between a Turbo Certificate and other options is that the option contained in the Turbo can be deactivated if the underlying touches a barrier. The barrier is said to be "knocked out", since when the price of the asset on which the Turbo is based reaches this threshold, the Turbo is immediately "deactivated", i.e. it no longer exists and therefore loses all value. 

Classic or unlimited 

There are two types of turbos: the "classic" turbos have a life span fixed in advance: the expiry date (or "maturity date"), and the Infinite Turbos which, on the other hand, do not have an expiry date and have an infinite life span. 

The majority of unlimited turbos have a barrier level equal to the strike (they are called BEST unlimited turbos: Barrier Equal Strike).

An example of a Turbo 

Let's consider an unlimited Turbo on an underlying asset that quotes €100.
Let's assume a strike of €75 and a barrier of €85. The buyer of the turbo is already at a premium since the intrinsic value of the turbo is (100-75) = €25. This is the price of the Turbo today. 
If the Underlying rises to €85 during a trading session, the Turbo will be deactivated and the Investor will receive a maximum redemption value of (85-75) = €10, i.e. a loss of 60%. 
If, on the other hand, the Underlying rises to €110, the Turbo's value increases to €35, i.e. a gain of €10 or 40%.