**What are Unlimited Turbos/Mini Futures BEST? **

Unlimited Turbos/Mini Futures BEST are securities that allow you to make money in both up and down markets. If you have a view on how a stock, index, commodity, or currency will perform, an Unlimited Turbos/Mini Futures BEST can provide leverage on your investment.

**Leverage **

The leverage effect is possible because when you trade an Unlimited Turbos/Mini Futures BEST, a smaller capital investment is required than if you were to buy the underlying asset directly. This allows you to enjoy the corresponding return that the underlying asset exhibits with less invested capital.

**How do Unlimited Turbos/Mini Futures BEST work? **

A Mini Future can be broken down into the following components:

- Underlying asset
- Type of Unlimited Turbos/Mini Futures BEST
- Capital investment
- Financing level
- Parity
- Knock-out level
- Risk premium

**Underlying asset **

The value development in an Unlimited Turbos/Mini Futures BEST is governed by the performance of its underlying asset, such as a stock, an index, or a commodity.

**Type of Unlimited Turbos/Mini Futures BEST **

There are two types of Unlimited Turbos/Mini Futures BEST; Unlimited Turbos/Mini Futures BEST LONG and Unlimited Turbos/Mini Futures BEST SHORT. If you believe in a positive price development in an underlying asset, you can create a return on your invested capital by buying an Unlimited Turbos/Mini Futures BEST LONG. If you believe in the opposite, a downward price development in an underlying asset, you can create a return on your invested capital by buying an Unlimited Turbos/Mini Futures BEST SHORT.

**Capital investment **

The financing of an Unlimited Turbos/Mini Futures BEST can be likened to a property finance. It consists of a cash deposit and a loan component. The cash deposit corresponds to the capital investment in an Unlimited Turbos/Mini Futures BEST. The capital investment is your own capital in the investment.

**Financing level**

In order to finance the purchase of the underlying asset that the Knock-out Warrant follows, in addition to the capital investment, a loan is required. This loan is called the financing level. Just like for a mortgage, you pay interest on the loan component in an Unlimited Turbos/Mini Futures BEST LONG. The interest cost is added to the financing level every day, as a debt financing loan. In an Unlimited Turbos/Mini Futures BEST SHORT, in some cases, you can receive interest since you have a credit balance. The interest effect is discussed in more detail in next week's issue.

**Parity or multiplier **

Several Knock-out Warrants are required to control a unit of the underlying asset. The number required is described using something called a multiplier or parity.

**Knock-out level **

With an investment in an Unlimited Turbos/Mini Futures BEST, you can never owe more money than you have invested. This is because the issuer has built in a knock-out function that guarantees that the value of the Unlimited Turbos/Mini Futures BEST can never be negative. An Unlimited Turbos/Mini Futures BEST has its knock-out level exactly the same as the financing level. In other words, if the value of the underlying asset touches the knock-out level, the instrument becomes worthless.

**Risk premium**

Another important parameter to keep track of in Unlimited turbos/Mini futures BEST is the risk premium. When the underlying asset reaches the knockout level, the issuer must start selling its positions in the underlying asset. The issuer takes a risk that they cannot sell their positions at the same price level as the financing level, which leads to a loss. The issuer charges a risk premium for that risk, the size of which they themselves determine. The risk premium is added to the price of Knock Unlimited turbos/Mini futures BEST.

**Pricing of an Unlimited turbos/Mini futures BEST **

Unlimited turbos/Mini futures BEST LONG is positively affected when the price of the underlying asset goes up. The price (value) of the instrument can be calculated using the following formula:

((Price of underlying asset - Financing level) / Parity) + Risk premium

Example: Assume you own an Unlimited turbos/Mini futures BEST on Hennes & Mauritz with a financing level of SEK 210 and a parity of 10. We assume that HM B is trading at SEK 240 at the time of calculation and that the risk premium is 5 öre (but as we know, it can vary).

The value of your Knock out call warrant on HMB = ((240 SEK - 210 SEK) / 10) + 0.05 SEK = 3.05 SEK

**Unlimited turbos/Mini futures BEST SHORT **

The Knock out put warrant is positively affected when the price of the underlying asset goes down. The price of the instrument can be calculated using the following formula:

((Financing level - Price of underlying asset) / Parity) + Risk premium

Example: Assume you own an Unlimited turbos/Mini futures BEST SHORT on the same stock, Hennes & Mauritz, with a financing level of SEK 260 and a parity of 10. We assume that HM B is trading at SEK 240 at the time of calculation and that the risk premium is 5 öre. The value of your Unlimited turbos/Mini futures BEST SHORT on HM B = ((260 SEK - 240 SEK) / 10) + 0.05 SEK = 2.05 SEK

**Interest cost for Unlimited turbos/Mini futures BEST **

As we know, we pay interest on the financing level of our Unlimited turbos/Mini futures BEST LONG. The interest is based on the market situation and a margin determined by the issuer, and the interest effect is calculated using the following formula:

((Financing cost x financing level) / (365 days)) / parity

Example: The issuer issues an Unlimited turbos/Mini futures BEST LONG on Hennes & Mauritz with the same conditions as in the example above. The interest rate is set at STIBOR 1 month + 2% margin. We assume that STIBOR 1 month is at 1.89% at the time of calculation. (3.89% x 210 SEK) / (365/10) = 0.0022 SEK Therefore, Unlimited turbos/Mini futures BEST LONG will decrease in value by 0.0022 SEK every day until the expiration date.

**Interest effect on an Unlimited turbos/Mini futures BEST SHORT **

In an Unlimited turbos/Mini futures BEST SHORT, there is a credit balance, which can result in an interest income. However, in some cases, there may be a negative interest income, which is entirely determined by the market situation and the issuer's margin on the interest rate. Example: STIBOR 1 month is at 1.89%, and the issuer has a margin of 2%. This leads to a negative interest income (1.89% - 2% = -0.11%). However, if STIBOR 1 month is at 3%, you will receive a positive interest income (3% - 2% = 1%). The calculation is done using the exact same formula as in the example for an Unlimited turbos/Mini futures BEST LONG.

**What risks are involved in trading Unlimited turbos/Mini futures BEST? **

Trading Unlimited turbos/Mini futures BEST involves high risk. The leverage effect works in both directions, and you can lose your entire invested capital, but never more.

**How do I trade Unlimited turbos/Mini futures BEST? **

You can trade Unlimited turbos/Mini futures BEST through your bank or broker.