Binance recently launched a product called Interval Yield Bao (hereinafter referred to as Interval Bao) among its financial products.
https://www.binance.com/zh-CN/rangebound
The English name of the product is rangbound
We will talk about this structured product in detail from three dimensions: advantages, disadvantages and underlying design.
Interval treasure, in short, means that players choose a date + an interval for financial management. If they do not jump out of this interval during the period, the player will obtain the corresponding income (the APR in the picture above is the annualization of income), but once encountered at any time If there is a certain range, the product will be stopped directly, and the player's account will have a certain slight retracement of the net value (generally around 0.5-2%, depending on the length of time and price width)
Supports two financial management methods: stablecoin and underlying currency (that is, what option players call U-standard and currency-standard, U-standard only has a longer expiration time)
Compared with traditional financial management and options, Zanbao has the following advantages:
1 (Very critical) In the traditional option structure, the seller’s risk is unlimited. Especially for novice sellers, it is easy to be oversold while shorting the volatility, resulting in liquidation in extreme market conditions. However, Interval Bao rationalizes the unlimited seller’s risk. of conversion into limited buyer risk.
2 Compared with dual-currency financial management, users of Zangbao will not cause short-term short-term losses due to positions being sold out. For example, if an extreme unilateral market occurs and suddenly rises by 50% in half a month, for dual-currency users, if the currency is in the middle If it is delivered into U, the loss will be huge, but the loss of the interval treasure is very limited, and it will not change whether the player is currency-based or U-based.
3. Zangbao supports stablecoins and BTC ETH (users can directly choose U-based or currency-based options to short volatility). Players will not change their overall position distribution when purchasing Zangbao, avoiding being caught in the unilateral market. Forced switching, missing the mark or buying the bottom prematurely. Compared with dual currency, Zangbao can take on more user positions.
4 Interval Bao is a high-end financial management product in the traditional market (only 150,000 U.S. dollars is required to qualify, and the minimum purchase price is 50,000 U.S. dollars), and the design of snowball and other similar obstacle options in the traditional market is more complex and difficult to understand (the lock-in period is also guaranteed for 6 months)
5. The income of Quanquan Bao is higher than that of dual-currency financial management. As shown in the figure, it is also no more than 31,500. The annualized income of Quanquan Bao is more than 30% (of course, this is also related to the risk of falling exposure of Quanquan Bao).
6 Interval Treasure allows players to pay more attention to amplitude and fluctuation rather than absolute price. It can better break away from the idea of guessing rising and falling prices and improve investors' trading thinking.
Quanbao is not a perfect product. It has the following shortcomings objectively.
1 For buyers, it is necessary to make certain judgments about the market (because if the judgment is wrong, there will be a slight risk of principal retracement ranging from 0.5% to 2%. Unlike dual-currency investment, you can comfort yourself whether you have reduced or increased your holdings. Warehouse··) is close to the R3 level ETF product of the stock market, that is, it has smaller fluctuations and will not retrace significantly.
2. The income of interval treasure has a great relationship with market fluctuations, so if you buy in a bear market, you will also suffer losses when encountering a sharp decline.
3 At present, Zangzhangbao has not developed ultra-long-term and ultra-wide options, and I believe it will be improved in the future.
Finally, let’s take a look at the underlying design of Quanbao
Interval treasure is actually a kind of exotic option, but it is a relatively simple type. Mainly optimized based on DNT options
A DNT option is a double-touch option, and DNT stands for "Double No Touch." In DNT options, investors need to set two barrier prices, an upper barrier and a lower barrier. If the price of the underlying asset has not touched the price range between these two barriers when the option expires, the option will automatically exercise at expiration and the investor will receive a fixed income; if the price of the underlying asset has touched the price range between these two barriers when the option expires, If the price range between these two barriers is exceeded, the option will automatically become invalid and the investor will lose the premium paid when purchasing the option. (That is, the amount of loss when the interval treasure is touched, which is generally not high, between 0.5% and 2%)
DNT is a relatively easy-to-understand exotic option, because its strategic profit and loss looks like a short volatility player + stop loss operation (and the current currency circle lacks suitable short volatility products). When the price breaks through the double sell price, the loss caused by the stop loss is immediately (actually manifested as the loss of premium), but this series of operations is packaged into a buyer's product, and the loss is locked, avoiding greater risks. Of course, as for the underlying design of this option, it is relatively complicated, so we will not introduce it in detail. It requires the designer's strategy + execution ability to be relatively high. Because if the underlying optimization is unfavorable, it will cause the cost of the option to be too high (the user loss after reaching is too large, and the interval treasure is locked at around 2%. I believe that players who have been option sellers know that this ratio is quite stable), and the designer loses much more money in extreme market conditions than the excessive loss caused by the premium. Therefore, it is best to avoid small exchanges for such products, otherwise, in extreme market conditions, the seller may be at risk of losing money and running away.
Finally, there are risks in the market. I remind you to read the product descriptions carefully when choosing financial products, look for products that match your risk preferences, and do not blindly pursue high returns or high turnover. We also hope that more interesting products can come out to add some vitality to the market, so that investors can find products they like.
