/biz/ - Business & Finance

>etf fag here
Does anybody here know pitfalls in reverse convertibles?
Due in 16 days, stock currently 50% over basic price. Sells at 101% ask, seems too low for 14.5% interest.
Is there something I am missing? Or is this just random safe money lying on the streets?

Does anybody here know a pitfalls of seemingly safe reverse convertibles?

>noob here, only did etf savings so far

This is how I thought it works:
If you "win", you get money + interest. If you "lose", you get stonks at the current market value + interest, so far so good. Basically, you carry the risk for the bank, and they give you money for that.

But then there's investments like ISIN DE000CL722J4 in pic related
Since it has such a high interest and it's almost Impossible for the stock to go under basis price (185 down to 120) in 16 days I would've thought it would trade at 130%-140%, but it's still "down" at an ask price of 101%, with 70k units open.

Is there any pitfalls I'm not seeing? Bank going bankrupt before payout? Possible opt-out by the bank? Extremely high taxation?
To me, this looks like "safe" 14.5% gains, which is too good to be true