Dual Investment is an advanced, non-principal-guaranteed financial product that utilizes options contracts to generate potential returns. It offers a flexible and efficient way to participate in the cryptocurrency market, catering to various investment goals and risk appetites. Whether you hold BTC, ETH, or stablecoins like USDT, you can use this product to potentially earn yields based on market movements.
The product lineup has expanded to include popular cryptocurrencies such as XRP, LTC, ETC, and EOS, providing more opportunities for diversification. Investors can select from a range of strike prices and expiration dates, allowing for tailored strategies that match market expectations and personal objectives.
How Dual Investment Works
Dual Investment operates by using financial derivatives to create scenarios where investors can benefit from both upward and downward market movements. The settlement currency—either the crypto asset or a stablecoin—depends on whether the market price at expiration is above or below the chosen strike price.
To get started, navigate to the 'Earn' section of your preferred platform and select the Dual Investment option. From there, you can browse available products, review annualized yield estimates, and choose parameters that align with your strategy.
Selling High: Capturing Premiums in Bullish or Stable Markets
Imagine you want to generate yield by effectively selling a cryptocurrency at a higher price. Suppose BTC is trading at $27,784. You select a product with a strike price of $28,000 and a near-term expiration.
If the price of BTC remains below $28,000 at expiration, you earn interest in BTC, receiving both your principal and yield in the original cryptocurrency. This outcome is ideal for investors who wish to accumulate more crypto without selling.
If BTC rises above $28,000 at expiration, your crypto is sold at the strike price, and you receive the proceeds in USDT. This can be advantageous if you intended to take profits at that price level.
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Buying Low: Accumulating Assets in Bearish Markets
Alternatively, you might use Dual Investment to accumulate a cryptocurrency at a lower price. For instance, if BTC is trading at $27,785, you could choose a product with a strike price of $27,000, using USDT to subscribe.
If BTC falls to or below $27,000 at expiration, you purchase BTC at a discount, receiving more crypto than you would have on the open market. This allows for cost-effective accumulation.
If BTC stays above the strike price, you earn interest in USDT, preserving your capital while generating a return—a safer outcome in sideways or rising markets.
Key Considerations for Dual Investment
Success with Dual Investment requires thoughtful parameter selection and risk awareness. Below are some best practices and important details.
Selecting the Right Strike Price
Your choice of strike price should reflect your investment goal. If you aim to hold and earn more of a cryptocurrency, choose a strike price far from the current market price to reduce the chance of conversion. If you intend to buy or sell at a specific price, select a strike closer to the spot rate.
Understanding Settlement and Timing
The settlement price is based on the average index price of the asset between 15:00 and 16:00 (UTC+8) on the expiration date. Returns are typically credited to your account by 18:00 (HKT) on the same day, though delays of up to 24 hours can occasionally occur.
Managing Risks Effectively
Dual Investment products are not principal-guaranteed. Returns depend on market volatility and the performance of the underlying assets. It is crucial to understand the product mechanics and only invest what you can afford to risk.
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Frequently Asked Questions
What is Dual Investment?
Dual Investment is a structured financial product that uses options to offer potential returns based on market conditions. It allows investors to earn yields whether the market moves up or down, depending on their chosen strategy.
How do I choose between high-sell and low-buy strategies?
Your strategy should align with your market outlook. If you expect stability or a downtrend, a high-sell strategy can help you earn interest. If you anticipate a drop and want to buy cheaply, a low-buy approach may be more suitable.
What happens if the market is highly volatile at expiration?
The settlement uses a one-hour average price to reduce the impact of short-term volatility. This ensures a fair and representative price for settlement purposes.
Can I lose money with Dual Investment?
Yes, these are non-principal-protected products. While you may earn yields, you might also receive fewer assets than expected if the market moves against your position. Always assess your risk tolerance.
Are there any fees involved?
Subscription typically does not involve extra fees, but investors should review the product terms for any applicable costs. Returns are net of any operational expenses.
How often are new products listed?
New Dual Investment products with updated parameters and assets are listed regularly, providing fresh opportunities based on current market conditions.