A reverse convertible is a security with fixed interest payments - but with a special feature: it is only at the end of the term that it is decided whether you will receive 100 percent of the nominal amount or whether a fixed number of the underlying share will be delivered instead. Like conventional bonds, reverse convertibles pay a fixed interest coupon. It is independent of the price development of the underlying and is usually significantly higher than the market interest rate. The reverse convertible is particularly suitable for you if you are assuming a sideways trend in the underlying - i.e., little fluctuation in share prices. Usually, one share is used as the underlying for a reverse convertible. A combination of several shares is also possible. The fixed interest payment is known in advance and is independent of the share price performance. When investing in a reverse convertible, you forego the upside potential of the underlying and receive the fixed higher interest rate in return. As long as the price of the underlying does not fall below the strike price on the valuation date, you realize the maximum return: you receive a redemption amount that includes the full nominal amount in addition to the fixed interest coupon.

However, if the underlying price is below the strike price at maturity, losses are possible. In this case, there is a physical delivery of shares, and you become a shareholder. The number of delivered shares is determined at the beginning of the term. The market value of the shares delivered is then correspondingly lower than the nominal amount.

In certain variants, reverse convertibles are classified as partial protection products. For example, a reverse convertible with barrier has an additional protection mechanism and you can achieve interesting returns even if prices fall slightly. As long as this barrier is neither touched nor broken by the underlying, the partial protection remains intact. The distance - strike price to barrier - represents the safety buffer. In addition to the classic reverse convertible, the protect and the protect pro reverse convertible, the index reverse convertible as well as the bonus pro reverse convertible are the interesting variants.

With reverse convertibles, you must bear in mind that you will miss out on price gains in the event of sharply rising share prices, which you would have been able to achieve with a direct investment in the underlying. The maximum redemption amount of a reverse convertible is always limited to the nominal amount. You are also not entitled to any dividends that accrue during the term. The interest, on the other hand, is paid in any case, regardless of the performance of the underlying.