1. What is the Snowball Income Certificate structured product?
First of all, we need to know what this snowball income certificate structure product looks like. In fact, there are 8 elements of this product. The editor has listed 4 points below. The first point is the knock-out observation day, which means observing one trading day every month mainly for announcements. The second point is the knock-in observation day. Each trading day begins on the opening observation day and ends on the closing observation day. The third is the protective cushion, which is the agreed maximum decline. The fourth is a knock-out event, which means that on any knock-out interest payment observation day, if the closing price of the underlying is greater than or equal to the knock-out price, a knock-out event will occur and the product will be terminated early. Therefore, the core investment view of the Snowball Structure Income Certificate is that we don’t know whether the stock can rise, but we feel that the stock will not fall too much, and we can obtain a certain amount of income from it.
2. What is the underlying transaction structure?
In fact, the underlying transaction structure is also easy to understand, that is, the income certificates of securities companies are divided into two types, one is the principal-guaranteed type, and the other is the split-principal-guaranteed type. If it is a principal-guaranteed type, it will be linked to stocks, indexes, and fund products. If it is non-principal guaranteed, it is linked to index enhancement, safety, and aggressiveness, which is also a snowball. Snowball structured income certificates refer to non-principal guaranteed safety cushion products. Therefore, the underlying trading structure of this snowball structure income certificate is also a relatively optimized trading model.
3. Summary
In fact, income certificates are essentially debt certificates between investors and securities firms, defining the creditor-debt relationship. For example, there is a creditor-debt relationship between a securities company and investors, and investors subscribe for income certificates, while bond companies issue and manage income certificates. The three of them are complementary to each other, and no one can do without the other. Only the close cooperation of the three can gain benefits.