How can the value differ from the underlying ?

Discussion in 'Options' started by Optimo1, Sep 25, 2009.

  1. Optimo1

    Optimo1

    Hello Traders

    I have a newbie question: How can the option value differ from the value of the underlying in the following Option (Warrant).

    Here is the Chart:
    http://img178.imageshack.us/img178/5439/imagephpp.png

    This is the termsheet: http://www.datafilehost.com/download-2608dfec.html

    Excerpt from the termsheet:
    "Ratio: 1
    Certificate Right: Each Certificate entitles the holder in accordance with the respective Terms and Conditions of the Certificates, to receive an amount in USD converted into CHF (using the USD/CHF rate based on the official mid-closing spot rates of USD/CHF on Reuters Page USDCHFFIXM=WM) equal to the Market Value on the Valuation Date multiplied by the Ratio and further multiplied by the Hedging Fee Factor.
    Max Hedging Fee: 0% p.a."

    Who can explain this to me ???

    Thank you

    Optimo