Structured products in finance point to a set of 2 or more assets or securities having a combination of an interest rate and single or multiple derivatives. Pre-packaged investments like these consist of traditional financial instruments, like equities, options, investment-grade bonds, indices, commodities, mutual funds, ETFs, or currency pairs, with non-traditional payoffs.
In simple words, structured products are savings or investment products in which the return is linked to an underlying asset having pre-defined features (maturity date, coupon date, etc.). Structured product can also be seen as a product package using 3 main components:
Since structured products have a huge variety, there is no simple definition—or one uniform formula for calculating the risk and payoff—of the structured products. Most of the structured products include “Options.” This is a type of derivative product which can give investors the right to buy or sell something at a pre-determined price and date. This price is called strike price.