Please help an idiot

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Anonymous
Please help an idiot 2016-05-31 18:56:04Post No. 1278419
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Please help an idiot Anonymous 2016-05-31 18:56:04 Post No. 1278419 [Report]

Am I correct that buying bull and bear certificates are basically just betting against the person selling the certificate? I mean, if I buy a bull certificate and the underlying asset is the S&P 500, is that essentially the same thing as me saying to a friend "Hey, I bet you x amount of dollars the S&P is gonna go up"?

Can someone explain this?

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Anonymous 2016-05-31 19:02:11 Post No.1278433
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Anonymous 2016-05-31 19:02:11 Post No.1278433 [Report]

>>1278419
First, a question:

What the fuck is a bull certificate?
Most anons here are not proficient in cattle futures.

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Anonymous 2016-05-31 19:26:16 Post No.1278477
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Anonymous 2016-05-31 19:26:16 Post No.1278477 [Report]

Yes, your understanding is correct. You own nothing, and have 100% counterparty risk.

They're an excellent instrument though.

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Anonymous 2016-06-01 15:22:52 Post No.1279998
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Anonymous 2016-06-01 15:22:52 Post No.1279998 [Report]

>>1278477
Doesnt the institution selling the certificate also carry risk? I mean if my bet is right then they have to pay me, right?

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Anonymous 2016-06-01 15:25:35 Post No.1280002
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Anonymous 2016-06-01 15:25:35 Post No.1280002 [Report]

>>1278433
Maybe he's buying a call? That's a bullish certificate.. Sort of

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Anonymous 2016-06-01 15:41:44 Post No.1280021
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Anonymous 2016-06-01 15:41:44 Post No.1280021 [Report]

>>1280002
>bull certificate
Sounds like it's just a CD tied to index performance, rather than a fixed interest rate.
On it's face, it looks like limited downside (there's a minimum rate paid) with significant possibility for upward movement.
However, I would bet the minimum rate is garbage.
It almost has to be.