After you have done your market research, by using the principal of 100,000 USDT that you’re holding, you have bought a BTC/USDT snowball product with tenors of 182 days.
Details of the product: Initial price is 20,000.00 USDT, the knock-out price is 21,000.00 USDT, and the knock-in price is 16,000 USDT, with a coupon rate of 20%.
On the first observation date, the asset price was 19,800 USDT, which went lower than the knock-out level. On the second observation date, the underlying price was 19,600 USDT, which is still lower than the knock-out level. Finally, it reached the knock-out level on the third observation date, the underlying asset price is 21,400 USDT. The product was redeemed automatically.
The calculation of the yield:
Principal* period annualization knock-out coupon* trading period/365 days,
the calculation in your situation:
100,000 USDT* 20%* 3 observation days 21 days/365 = 1,150.68493USDT.
You will be receiving : Principal 100,000 USDT+ Knock-out coupon 1150.6493USDT＝101,150.6493USDT.
As the first investment was quite successful and you are really confident in this product, you again buy the same product. This time, the price of the underlying cryptocurrency on the first observation day was 17,000 USDT, which was lower than the knock-out level; on the second observation day, the price of the underlying cryptocurrency was 15,600 USDT, which was still below the knock-out level. On the last observation day, the underlying cryptocurrency price was between the knock-out and knock-in levels at 18,000 USDT. Due to there being a knock-in event in the mid-term, eventually, the underlying cryptocurrency price was lower than the knock-in level, there was no profit nor loss, and the principal of 100,000 USDT was returned.
As there is no profit or loss in the previous investment, you decide to buy this product again after you have made an evaluation. The price of the underlying cryptocurrency on the first observation day was 17,000 USDT, which was below the knock-out level; On the second observation day, the underlying cryptocurrency was at 15,600 USDT, still below the knock-out level. The price of the underlying cryptocurrency ended at 14,000 USDT on the end-of-period observation day, eventually falling below the knock-in level.
Since there was no automatic knock-out, the product was not redeemed in advance, and the price of the underlying cryptocurrency dropped all the way, which was lower than the conversion price at 80%, and a knock-in event occurred. At maturity, the performance of the underlying cryptocurrency is 70%, which is lower than the conversion price of 80%, and the principal will be converted to BTC based on the conversion price. In other words, it means buying BTC at the conversion price, which has a 20% discount compared to the price at the time of the transaction, and the principal will be converted to BTC.
The formula of this scenario:
Principal / the underlying cryptocurrency price at the end of the period,
the calculation in your situation:
100,000 USDT/16,000 = 6.25 BTC.
You will be receiving 6.25 BTC.
After a few days, you reckon that the market has stabilized, and after making an evaluation, you buy the same product again. The price of the underlying cryptocurrency on the first observation day was 19,200 USDT, which was below the knock-out level; the price of the underlying cryptocurrency on the second observation day was 18,400 USDT, which was still below the knock-out level.
The underlying cryptocurrency price was all the way below the knock-out level. After several observation days, it gradually began to stabilize and rise and finally exceeded the knock-out level. At the end of the period, the price of the underlying cryptocurrency on the observation day was knocked-out at 21,800 USDT (109%). There wasn't any early redemption, but eventually, it was knocked out.
The formula of this scenario:
Principal * period annualized knock-out coupon * transaction period 182 days/365 days,
the calculation in your situation:
100,000 USDT * 20% * 182/365 = 9,972.6 USDT.
You will be receiving : Principal 100,000 USDT + 9,972.6 USDT = 109,972.6 USDT
The latest investment results boost your confidence, after you have done a market assessment, you decide to buy the same product again. The price of the underlying cryptocurrency on the first observation day was 18,800 USDT, which was below the knock-out level; between the first and second observation days, it was above the knock-out level for a time and then fell all the way down to below the knock-out level, it was lower than the knock-out level but always higher than the knock-in price. The underlying cryptocurrency was at 18,000 USDT on the second observation day, still below the knock-out level. It went all the way below the knock-out level, and above the knock-in level, no knock-in events occurred. The price of the underlying cryptocurrency on the period-end observation date was 17,600 USDT(88%).
The formula of this scenario:
Principal * period annualized knock-out coupon * trading period 182 days/365 days,
the calculation in your situation:
100,000 USDT * 20% * 182/365 = 9,972.6 USDT.
In the end, you will be receiving: Principal 100,000 USDT + 9,972.6 USDT = 109,972.6 USDT.
Snowball products are one of the most popular products in the conventional financial field. If you are a moderately bullish investor or an investor who holds a “range trading” view on the underlying cryptocurrency, an investor who researches well about the market and has a demand for income enhancement, this capital unprotected snowball product will be a good choice. With a potentially high return, if there is a knock-out event on the observation day, the product will be automatically redeemed in advance. Your principal may be converted into the target cryptocurrency at a price lower than the current market price. There are advantages, but please be cautious that this is a high-risk product, there is a risk of short-running, extreme market conditions may occur, the principal will be lost, and it cannot be redeemed in the mid-term. It can only be settled when knock-out is incurred or expiration is met. Before purchasing, please carefully read the Snowball purchase agreement and risk warnings in detail, and please evaluate if it fits your investment strategy before purchasing this product. We truly hope the above gives you a more complete understanding of how to calculate returned income of Snowball.
The details of the return clause:
