What is OverUnder?

OverUnder is a generic name for two financial instruments: Over and Under. As the name suggests, you have to predict whether the price of a share or index on the expiration day will be above or below a pre-determined price. If the buyer is right, he or she receives 1 SEK per purchased unit on the expiration day. If, however, it turns out on the expiration day that the buyer was wrong, he or she will not receive anything and the entire amount invested will be lost.

Buyers of an Over receive 1 SEK per unit if the share closes above the pre-determined price (known as the strike price) on the expiration day. The buyer receives nothing if the share closes at or below the strike price.

Buyers of an Under receive 1 SEK per unit if the share closes below the pre-determined price (the strike price) on the expiration day. The buyer receives nothing if the equity closes at or above the strike price.

OverUnder has the following characteristics:
 

• Potential for favorable returns with limited risk
• Choice of investing small amounts
• Continuous trading

Potential for favorable returns with limited risk

The percentage of the return on an OverUnder investment may be relatively substantial. If the share closes on the “right” side of the strike price, the return may be anything from a few percent to several hundred percent depending on the price you paid. The limited risk entails that you as the buyer can never lose more than the amount of your initial investment.
 

Choice of investing small amounts

You have extensive options to choose the risk level that you wish to take through the opportunity of investing in both large and small amounts. If the price per unit is, for example, 0.50 SEK and the purchase comprises 100 units, the investment amount will equal 100 x 0.50 SEK = 50 SEK (excluding trading fees). Naturally, it is possible to make larger investments than this by buying more units.

Continuous trading

OverUnder is traded through your broker or bank on the exchange in the same manner as shares, warrants and options. Market makers set ongoing prices on each OverUnder and thereby enable a holder of an OverUnder to always sell it back at market price. Accordingly, you do not need to wait until the expiration day to realize a profit or loss.