Lots of Apple reverse convertibles out there.
Here's a couple of examples yielding 9% and 12%. Both convert to AAPL stock if they drop 20%.Under these notes, often called "reverse convertibles", it appears to an investor that he or she is buying a fixed income or bond-like investment which would rise as the price of Apple rises and that the return would mimic or exceed the return of the Apple stock while acting like a bond. Unfortunately, as Apple has cratered in value, so has the value of the Apple based structured notes.
"More than $241 million of structured notes tied to Apple Inc. face losses after a 27 percent drop in the stock of the world's most valuable company eroded built-in cushions that protect investors," Dugan wrote. "Banks issued 76 US notes linked to Apple stock during the seven weeks starting August 20 when the company was valued at $650 a share or more," Dugan continued. In total, banks issued $1.66 billion of such notes, making Apple the most popular underlying company in such high commission structured products.
Reverse Convertible Notes 3720 - Apple
Reverse Convertible Non-Principal Protected Notes - AppleThis is an income product linked to the share of Apple.The product offers a coupon of 9% p.a., paid monthly throughout the investment period.At maturity, the product offers a capital return of 100%, if the final share level is equal to or greater than the initial level or if the underlying does not fall by more than 20% from its initial level at any time during the investment. If the underlying do...
From May 31, 2011 FINRA Takes Aim At Brokers Selling Reverse Convertible NotesReverse Convertible Non-Principal Protected Notes - Apple
This is an income product linked to the shares of Apple.The product offers a coupon of 12% p.a., paid monthly throughout the investment period.At maturity, the product offers a capital return of 100%, if the final share level is equal to or greater than the initial or if the underlying does not fall 20% or more during the investment. If the underlying does fall 20% or more during the investment an...
ALPS was going to do a Reverse Convertible ETF at one point, but I don't think it made it past the SEC.
http://www.indexuniverse.com/sections/n ... e-etf.html
Stating the obvious: Beware of structure products and yield hogs can get slaughtered.