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What is a bull bear certificate?
1、 Definition
Bull bear contracts, similar to warrants, can track the performance of related assets without having to pay the full amount of the actual asset purchased. This means that bull bear contracts can provide leveraged returns, but at the same time have the risk of expanding losses.
Bull bear contracts can be divided into "bull contracts" and "bear contracts".
Bull certificate: Investors who are optimistic about the future of a certain underlying stock can choose to purchase a "bull certificate". When the underlying stock rises, the "bull certificate" increases exponentially, similar to call options;
Bear Securities: Investors who are bearish on the future of a certain underlying stock can choose to purchase a "bear certificate". When the underlying stock falls, the "bear certificate" will rise exponentially, similar to put options.
Bull bear contracts can be divided into "bull contracts" and "bear contracts".
Bull certificate: Investors who are optimistic about the future of a certain underlying stock can choose to purchase a "bull certificate". When the underlying stock rises, the "bull certificate" increases exponentially, similar to call options;
Bear Securities: Investors who are bearish on the future of a certain underlying stock can choose to purchase a "bear certificate". When the underlying stock falls, the "bear certificate" will rise exponentially, similar to put options.
2、 The difference between bull and bear certificates
There are conditions attached to the issuance of a CBBC: during the validity period of the CBBC, if the price of the relevant asset reaches the price level specified in the listing document (referred to as the "buyback price"), the issuer will immediately take back the CBBC, which means that the original expiration date of the listing document will no longer be valid, and the CBBC will only have residual value. This makes the pricing mechanism of bull and bear contracts significantly different from that of warrants.
For example, a bull certificate with Tencent as the subject matter has a designated recycling price of 330 yuan. Assuming Tencent's stock price is 340 yuan, when it falls to 330 yuan, it triggers a mandatory buyback event, and the bull certificate will be reclaimed by the issuer, ultimately retaining only the remaining value.
For example, a bull certificate with Tencent as the subject matter has a designated recycling price of 330 yuan. Assuming Tencent's stock price is 340 yuan, when it falls to 330 yuan, it triggers a mandatory buyback event, and the bull certificate will be reclaimed by the issuer, ultimately retaining only the remaining value.
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