The cumulative option contract works by first selecting a stock. If the stock price is within 105% of the contract price, investors can follow the discount every day for one year (250 trading days). If the stock price rises above 105% of the contract stock price, the contract will end; but if the stock price falls below the agreed delivery price, the investor must take over the goods at the agreed price. The stock price buys leveraged shares every day.

The attraction of this kind of derivatives is that when the market rises, investors can buy bullish shares or assets at par. However, when the asset price falls, investors will suffer heavy losses. That is, the profits are limited, but the losses are unlimited.

Accumulated option, the English name Accumulator, is a financial derivative instrument for buying and selling assets (stocks, foreign exchange or other commodities) in the form of a contract. It is an over-the-counter transaction between investment banks (bookmakers) and investor clients. Generally, investment banks will sign contracts with clients for up to one year. Cumulative options involving stocks are called cumulative stock options, or cumulative stock options for short.

Cumulative option KODA has four characteristics:

1. The exercise price of buying stocks is often 10% to 20% lower than the current price;

2. When the stock price rises 3% to 5% above the current price, the contract will be canceled automatically;

3. When the stock price falls below the exercise price, investors must double their shares;

4. The contract period is generally one year, and investors can purchase it as long as they have 40% of the contract amount as cash or stock collateral. Therefore, this product is often highly leveraged.

In the common people's concept, Accumulator buys some discounted stocks through these private banks, which is not essentially different from its own operation in the securities market. However, in fact, this is not the case. The funds stored in the accounts of these customers who invest in Accumulator are not directly used to purchase stocks on the market.

As for the money that the customer has deposited in the bank, he has actually purchased the margin of this financial derivative product, so it is often said that your customer has deposited 20 million, and he will give it to you based on your asset status. Amplify, amplify is the amount you buy.

Why do so many investors flock to such a financial product? Experts analyzed that one reason is that some investors do prefer high-risk and high-profit financial products; another reason is that during the bull market, some investors blindly believe that the stock market will only rise but not fall; and another reason is that many investors are not interested in investing in financial products. The risks of financial derivatives are not well understood.

Many investors said that they did not understand these financial derivatives at all at that time. Most people only knew about the returns of such products but did not know about their huge risks. Under the influence of leverage, assuming you have 10 million yuan in your account, your contract value will be as high as 50 to 60 million yuan. While the income is amplified, the risk is also amplified.

However, in our opinion, KODA is like the Robin Hood of the financial market, which can quickly evaporate the funds of the nouveau riche and reduce the gap between the rich and the poor.

Whether you are doing foreign exchange margin, futures, or the KODA derivatives market, risk prevention is the most important thing.