Turbos are interesting for at least these reasons:
- Price Transparent - Turbos are listed & traded on the London Stock Exchange
- No Stamp Duty - even thought Turbos are listed products, the no stamp duty "treat" applies :-)
- Geared - the higher the price of Turbo the more gearing it provides. There are usually several Turbos for an asset with different payouts and risks asociated with, so trader can pick the most suited gearing levels.
- Guaranteed Stop Loss - Contracts usually come in 3 month expiry times and have a Knock Out levels. It is the same as the strike level. For a long turbo, the turbo has value as long as the index is above the knock out level, and for a short, below that level. Otherwise position gets closed even with up or down gaps in the derivative. This guaranteed stop loss feature is incorporated into the derivative price, there are hence no extra charges.
They are accesible through most private investment brokers and certainly deserve some attention.
