Turbos

How to calculate the value of a Turbo ?

The value of a Turbo can easily be calculated. It is equal to the difference between the value of the underlying asset and the level of funding. Example : If ABC quotes € 30 and the level of funding is € 25, it means that the Turbo value is € 5 (€ 30 - € 25).

Sometimes, the value of the underlying asset can be very high or very low. In this case, the Turbo can be calculated with a ratio. Suppose that Nikkei 225 quotes 18.000 and that the ratio is 100. The Turbo value will be 180 (18.000 / 100).

Finally, it is possible that the Turbo is quoted in another currency. Then, you must take the exchange rate into account.

Let’s see an example to calculate the Turbo value with the 3 concepts: level of funding, ratio and exchange rate.

What is the value of Turbo Long DowJones 10.000 with the following characteristics :

  • DowJones at 14.000
  • Level of funding of 10.000
  • Ratio of 100
  • Exchange rate EUR/USD of 1,35

Step 1: Difference between the value of the underlying asset and the level of funding :

14.000 – 10.000 = 4.000 USD

Step 2 : Division by the ratio :

4000/100 = 40 USD

Step 3 : division by the exchange rate :

40/1,35 = 29.63 USD

The calculation above does not take into account the funding costs proper to each issuing bank.

In general, the formulas used to calculate the value of a Turbo are the following :

Value Turbo Long : Value of underlying asset - Level of funding

Ratio x Exchange rate

Value Turbo Short : Level of funding - Value of underlying asset

Ratio x Exchange rate