Snowball bursts out
Many friends asked me what the hell a snowball is. My personal interpretation of snowball bursts in the past two days is easy for everyone to understand. Recently, the logic is probably as follows: Snowballs are essentially a conditional put option with 10% coupon interest. Assuming someone buys a snowball for $100, it is agreed that the stock price fluctuates between $80-120. When the stock price exceeds $120, the investor gets the principal amount plus 10% interest. If the stock price falls below $80, the investor loses part of the principal. This also involves the trader's own leverage issue. If the investor opens a position using a margin of 5 times leverage, then knocking in means bursting out the position. The brokerage will force the contract to close, and the investor account will return to zero. Summary: Limited benefits, unlimited risk.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
