In this article, we present “Accumulator”, a popular structured product and explains how investors can use it to boost returns.
ETH has staged a spectacular rebound of 70% from the low as the dust from the recent havoc settles and investors get increasingly bullish about the upcoming Merge. You may have missed the bottom but don’t be annoyed. You can still buy ETH at 1400. Here is how:
Accumulator is a popular structured product in equity and FX. It allows investors to buy assets at a discounted price. This is achieved by incorporating a knock-out feature. As long as the knock-out barrier is not triggered, investors can keep accumulating a target asset at a fixed strike lower than the initial spot, hence the name “accumulator”.
For example, with ETH spot at 1700, an accumulator buys 1 ETH every week for 16 weeks at 1400 so long as ETH stays below 2000. If ETH went above 2000, the knock-out barrier would be triggered, the accumulator would be early-terminated and the investor would have profited from ETH bought thus far and could opt for entering a new accumulator.
The benefit of an accumulator is obvious. You can buy ETH at a price that is significantly cheaper than the spot. However, be reminded that this doesn’t come without risk. If the ETH price falls below the strike, you still have to buy at the strike.
An accumulator is similar to a Dollar-Cost Averaging (DCA) strategy in that both involve investing an equal amount of money in an asset at regular intervals over a certain period of time, regardless of the price. Both can be a reliable strategy for long-term investors who are committed to purchasing periodically but don’t have the time or inclination to time the market.
In certain scenarios, an accumulator can outperform DCA.
Accumulators are fully customizable products. Don’t hesitate to contact us for variations in the target asset, maturity, frequency, strike and barrier. Email us at [email protected] or via twitter @OrBit_Markets.
OrBit Markets is an institutional liquidity provider of exotic options and structured products in digital assets. Founded by a strong team of leaders in trading and computer science, and backed by Matrixport and Brevan Howard Digital, OrBit brings its expert know-how in options to the crypto market. Headquartered in Singapore, OrBit serves institutions across CeFi, DeFi and TradFi looking for more sophisticated investing and hedging solutions in digital assets. For more information, visit www.orbitmarkets.io.
This article is intended for educational purposes only and does not constitute the provision of investment advice and is not intended to do so. OrBit specifically disclaims all liability for any direct, indirect, consequential or other losses or damages that may arise from any reliance on this article.
Trading in cryptocurrencies, derivatives and structured products may involve a high degree of risk and may not be appropriate for all investors. Under some market conditions, it may be impossible to liquidate a position. Investors may suffer substantial losses and even lose the entire amount of your investment.
The product described in this article is intended for sophisticated investors capable of evaluating the merits and risks of the product, its suitability and appropriateness and its legal, taxation, accounting and financial implications and that in making this evaluation, investors are not relying on any recommendation or statement by OrBit. Investors should ensure that they independently assess these things and fully understand the product. They should also consider seeking advice from their own advisers in making this assessment.
Prices provided in this article are illustrative only and do not represent a firm bid or offer price.
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