As a Chinese user, I want to ask you a question that hits your soul. Which one do you prefer, American style or European style? 🤔

To talk about the difference between the two, American style is more liberal, while European style is more traditional and rigid. Is the American style more liberal or the European style more affordable?

Wait, what do you think I'm talking about?

What do you think the option type I am referring to is? For many people, options may be a bit unfamiliar. In this article, I will use a product to help you understand some basic classifications of options. Understanding options will help you build a more diversified investment strategy. Feel more comfortable in the market~

1. The difference between European style and American style

This has something to do with the delivery method of options. Options are different from contracts. The contracts we usually use can close our positions at any time. Options are different. Options have the concept of "expiration date". This expiration date frames the holding period of your transaction within a range. At least you cannot hold a position beyond this range.

There are differences in delivery methods between American options and European options:

  • American options can be delivered on any trading day between the subscription and expiration dates, which is more free.

  • European options can only be delivered on the expiration date. Generally speaking, the time limit is relatively strict.

High liquidity of funds is the first choice pursued by many investors. For example, #Binance founder CZ once said: From the perspective of capital attributes, he cares more about the liquidity of assets rather than the rate of return. This is also his original intention of choosing ALL IN encryption, because encrypted assets are not restricted by the subject, unless you actively choose to lock up~

Therefore, the disadvantage of European options is that your funds will be forced to lose liquidity within a period of time. It can be said to be a logic similar to [bank dead period]

2. European options and dual-currency investment

But in fact, European options are not without their advantages, otherwise they would have been eliminated by the market long ago. Although American options are endowed with higher flexibility, their fees are also higher than European options. Over the years, this will be a considerable expense.

So if you are an investor with a conservative style, then you should do what Buffett said: reduce your trading frequency.

If you do not use options products, choosing European options will further reduce your transaction fees.

but!

If you feel that getting started with options is too troublesome, you can also use ready-made products. These products have been "packaged" and you can roughly know where your end point is based on your starting point.

For example, Binance’s own financial product [Dual Currency Investment] is a European option-style product. You can lock in the price in advance or earn interest by subscribing for the product.

and!

There is no handling fee for dual-currency investment in this product! This is more advantageous than traditional European options. If you want to simply purchase options to configure your investment portfolio, dual-currency investment will be a good option~ (supports 16 mainstream assets)

but!

Dual-currency investment also has certain risks (for certain styles of investors). For example, investors with more aggressive styles are always committed to [buying at low points and selling at high points] and allocating dual-currency investment as a financial management tool. However, big market trends may not be suitable for you, because this may result in missing out on big potential market trends.

I looked at the longest-term dual-currency investment product #BTC , which is currently priced at 25,800. It can be allocated for up to 200 days, which is half a year:

  • You can get up to 13,000 points of premium selling rights or an annual interest rate of about 4%~

Based on this data, your biggest profit potential in half a year is the 51% increase in the current price of Bitcoin or the 4% interest rate. For some friends who claim to be willing to pay several times or dozens of times at every turn, this may not be suitable for them. product

3. Summary

Finally, let’s summarize the features of this European option product of Binance [Dual Currency Investment]:

  • Zero handling fee

  • High short-term interest rates (currently up to 60%)

  • Provides many types of assets (16 types)

Risk is actually a matter of volatility and liquidity. In any case, assets require reasonable allocation. Trying more diverse products can also share risks to a certain extent.

After all: if you don’t manage your finances, your finances won’t care about you~