What is dual-currency financial management?

Also known as Dual Currency Investment, Dual Currency Investment is a floating return non-principal protected investment product. The yield of the product is clear and fixed at the time of purchase, while the settlement currency is uncertain. When the product expires, the settlement currency depends on the comparison between the settlement price and the linked price at the time of expiration.

The principle behind it is to sell calls or puts, which is a rental type investment. You can choose to sell at a high price or buy at a low price. Depending on the difference between the pegged price and the current price, you get u or coins.

the core element

The core elements of dual-currency financial products mainly include: expiration date (option delivery date), type (option type Put or Call), linked price (option strike price strike), yield (premium price converted into APR), investment quantity (Number of options).

The focus of dual-currency financial management is the pegged price when placing an order. After expiration, if the market price is less than the pegged price, then you will get the corresponding profit and principal - Bitcoin (Bitcoin); after expiration, if the market price is greater than If you peg the price, you will get the corresponding profit and principal (the original Bitcoin is converted into U) - U (USD).

Calculation

Specifically, for the underlying currency (such as BTC) and the pricing currency (such as USDT)

When placing an order, select: linked price S0, expiration time, and a rate of return r will be given based on the selected platform.

At expiration, compare the pegged price S0 of the underlying currency with the current settlement price St

  • If the settlement price is less than the linked price, the settlement will be made in the underlying currency. Settlement BTC = investment amount BTC * (1 + rate of return r)

  • If the settlement price ≥ the linked price, settlement will be based on the pricing currency, settlement USDT = investment amount USDT * (1 + rate of return r)

Example

回报Payoff = rmin(S0, St) = rmin(S0-St , 0) + r*St

The portfolio of this formula: one short call option (K=S0) + one long contract/spot

risk

At the end of the shock and the early stage of the slump, if you do dual currency and get delivered, it is equivalent to buying the spot and being covered. The most suitable time is in the upward trend. After the surge, there will be a shock and consolidation, so that you will not miss the spot holding market and make full use of it. Funds will not be trapped even if the two currencies are delivered during the upward trend.