PAYOUT/PAYOFF
A general term used to describe the return provided by a structured product or an option. A lot of products pay a fixed coupon plus additional returns linked to performance of the underlying. If the embedded option is path-dependent, the returns will be a function of both the performance of the index and the payout formula. For example, the payout from a five-year quarterly Asian option with a 70% participation of the Dow Jones Euro Stoxx 50 Index is equal to 70% of the average of 20 different prices over five years, and not the level of the index at maturity.