Gate.io Blog Gate.io Quick-fire Questions on CBBC

Gate.io Quick-fire Questions on CBBC

25 May 12:15

Q: What is a CBBC?
A: CBBC, or callable bull/bear contract, is a kind of financial derivative with established conditions (mandatory call, strike price, expiration date, etc.), which can track the trend of the target assets. It has the nature of leverage and is essentially an option.

Q: What do "Bull" and "Bear" mean?
A: CBBC represents your opinion on the future market. If you are bullish on the future market, buy the bull one; if you are bearish, buy the bear one.

Q: What are the characteristics of the Gate.io CBBC?
A: 1. CBBC price trends are similar to target asset prices, with high transparency of valuation. 2. Its trading experience is like spot trading 3. No margin required to obtain leverage 4. With a call price and mandatory recovery mechanism 5. Investing funds are the maximum loss with no need to cover positions

Q: What Kind of market is suitable for CBBC trading? A: Market with a small range of fluctuation.

Q: Who is CBBC suitable for?
A: Investors who prefer high-risk or short-term operations can choose CBR trading. At the same time, as CBBC is simple, if you are new to it, you can go to the Gate.io CBBC simulator first.

Q: What is the difference between CBBC and leveraged ETF?

Q: What is the difference between CBBC and warrant?

Q: what happens when the CBBC reaches the trigger point?
A: When the price of the underlying asset reaches a call price before expiry, it will trigger a mandatory call. the CBBC will stop trading and be forced to be called by the issuer to wait for settlement. After a mandatory call, CBBC enters an “observation period” to observe whether the price of the CBBC rises or falls below the strike price during two complete trading sessions.

Q: What are the funding costs of a CBBC?
A: Funding costs are the financial cost of creating a CBBC for the issuer, which is reflected in its price and will decrease from day to day. As the CBBC gets closer to its expiration date, the financial cost becomes smaller.

Q: I Am a novice, warrant, or CBBC, which one is more suitable for me?
A: The CBBC is not affected by the time value and implied volatility. It focuses more on the call price and is closer to the price of the target asset, so the structure of the CBBC is relatively more "Simple and rough". But the mechanism of mandatory call means the CBBC can only be recalled once the strike price is triggered, even reversed trends are helpless. Warrants have a time value, the closer they are to the expiration date, the higher the value, and it is also affected by the implied volatility. But there is no risk of mandatory calls, so it can be "turned over" if the market recovers. So warrants have a relatively smaller risk.

In fact, for both market conditions and different rules, there are different risks and benefits. For a novice, the most important part is to understand the characteristics of the two products, conduct flexible operations so as to win benefits.

Gate.io has launched a number of CBBCs of mainstream currencies such as BTC, ETH, etc. Welcome to the experience.

*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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Gate.io Quick-fire Questions on CBBC

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