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Crypto AQ offers a wide variety of Bitcoin derivative contracts depending on your own investment need. We only focus on non-conventional or exotic derivative contracts and we do not offer any conventional derivative contracts such as futures or forwards. Depending on your size of investment, we can tailor a derivative contract for you with special features. As an OTC derivative house, we usually hedge all our exposure through sophisticated mechanisms such that counter-party risk could be minimized. Currently the two most popular products we are offering are Bitcoin Accumulator and Bitcoin Decumulator.

Bitcoin Accumulator is a derivative contract that allows you to buy a fixed amount of Bitcoin at a pre-determined price periodically. For example, you may enter into a Bitcoin Accumulator contract such that you are obliged to buy 1 BTC at 10,000 USD/BTC (regardless of change in market price) every day during the contract life. Usually, the contract price is better than the market price when the contract is opened, and therefore you can earn a steady profit even if the market price of Bitcoin does not change during contract life. Decumulator works in similar way but with an opposite direction, i.e. you are obliged to sell fixed amount of Bitcoin at a pre-determined price during the contract life. The general terms are as follow:

Bitcoin Accumulator
Standard Term
Contract Life The period of settlement; Ranging from 7 - 30 Days
No. of Bitcoin per Day The No. of Bitcoin you have to buy on each settlement; Minimum 3 BTC
Notional Amount No. of Bitcoin per Day x No. of Settlement (assuming no knock-out)
Settlement Frequency Frequency of settlement during contract life; 00:00 UTC Daily
Strike Price The pre-determined price at which contract holder buy Bitcoin
Reference Price Price which settlement refers to and is capped by Knock-out Price; Volume-weighted average price of Bitstamp USD/BTC from UTC 23:00:00 to 23:59:99 on each day
P/L Calculation At each settlement, contract holder realized a P/L of:
[(Mt – Pt) x No. Of Bitcoin per Day] / Mt BTC
where:
Mt : Reference Price
Pt : Strike Price
Knock-out If reference price of any settlement is higher than the Knock-out Price, the contract will be automatically terminated after the settlement
Contract Deposit BTC that needs to be deposited in order to enter into the contract; the exact amount will be quoted by us
Contract Balance Contract deposit plus any P/L realized; re-calculated after each settlement
Contract Closure Contract will only be closed in any one of the following situations:
i. Contract Balance drops below zero;
ii. Knock-out is triggered;
iii. Contract life is over.
Settlement Method Net Settlement in Bitcoin
P/L Realization Contract holder can only withdraw its contract balance after the contract has been closed. No withdrawal is allowed as long as the contract is open. If the contract balance is negative, the contract balance will be considered as zero and the contract will be closed automatically
Fees None (Except Bitcoin transaction fee charged by network)
Guaranteed No. of Bitcoin Feature An optional feature that allows you to purchase a guaranteed no. of Bitcoin even if knock-out price triggered

Bitcoin Decumulator
Standard Term
Contract Life The period of settlement; Ranging from 7 - 30 Days
No. of Bitcoin per Day The No. of Bitcoin you have to sell on each settlement; Minimum 3 BTC
Notional Amount No. of Bitcoin per Day x No. of Settlement (assuming no knock-out)
Settlement Frequency Frequency of settlement during contract life; 00:00 UTC Daily
Strike Price The pre-determined price at which contract holder sell Bitcoin
Reference Price Price which settlement refers to and is capped by Knock-out Price; Volume-weighted average price of Bitstamp USD/BTC from UTC 23:00:00 to 23:59:99 on each day
P/L Calculation At each settlement, contract holder realized a P/L of:
[(Pt - Mt) x No. Of Bitcoin per Day] / Mt BTC
where:
Mt : Reference Price
Pt : Strike Price
Knock-out If reference price of any settlement is lower than the Knock-out Price, the contract will be automatically terminated after the settlement
Contract Deposit BTC that needs to be deposited in order to enter into the contract; the exact amount will be quoted by us
Contract Balance Contract deposit plus any P/L realized; re-calculated after each settlement
Contract Closure Contract will only be closed in any one of the following situations:
i. Contract Balance drops below zero;
ii. Knock-out is triggered;
iii. Contract life is over.
Settlement Method Net Settlement in Bitcoin
P/L Realization Contract holder can only withdraw its contract balance after the contract has been closed. No withdrawal is allowed as long as the contract is open. If the contract balance is negative, the contract balance will be considered as zero and the contract will be closed automatically
Fees None (Except Bitcoin transaction fee charged by network)
Guaranteed No. of Bitcoin Feature An optional feature that allows you to sell a guaranteed no. of Bitcoin even if knock-out price triggered
Deposit Hedging Feature An optional feature that allows you to short the amount of Contract Deposit during Contract Life

Note: The above terms are for illustration purpose only and do not constitute any terms of products offered by us. We also offer other Bitcoin derivative contracts.

Example A: 7-Day 5 BTC Bitcoin Accumulator

Assuming you enter into a Bitcoin Accumulator contract with the following terms:

Term
No. of Bitcoin per Day5 BTC
Contract Life7 Days
Notional AmountNo. of Bitcoin per Day x No. of Settlement = 5 x 7 BTC = 35 BTC
Strike Price15000 USD/BTC
Knock-out Price18000 USD/BTC
Guaranteed No. of Bitcoin FeatureNone

After entering the contract, the Reference Price of each settlement is as follow:

Settlement Day Reference Price (USD/BTC)
Day 115500
Day 214500
Day 315000
Day 415500
Day 516000
Day 616500
Day 717000

On your first settlement day, your profit will be calculated as:
[(Mt – Pt) x No. of Bitcoin per Day] / Mt BTC
= [(15500 - 15000) x 5] / 15500 BTC
= 0.16129033 BTC
And your overall P/L is as follow:

Settlement Day Reference Price (USD/BTC) P/L (BTC)
Day 1155000.16129033
Day 214500-0.17241380
Day 3150000.00000000
Day 4155000.16129033
Day 5160000.31250000
Day 6165000.45454546
Day 7170000.58823530
Total1.50544762

You will receive your initial deposit + 1.50544762 BTC after settlement on Day 7.

Example B: 7-Day 5 BTC Bitcoin Accumulator (Knock-out)

Assuming you enter into a Bitcoin Accumulator contract with the following terms (same as Example A):

Term
No. of Bitcoin per Day5 BTC
Contract Life7 Days
Notional AmountNo. of Bitcoin per Day x No. of Settlement = 5 x 7 BTC = 35 BTC
Strike Price15000 USD/BTC
Knock-out Price18000 USD/BTC
Guaranteed No. of Bitcoin FeatureNone

After entering the contract, the Reference Price of each settlement is as follow:

Settlement Day Reference Price (USD/BTC)
Day 115500
Day 214500
Day 315000
Day 416000
Day 517000
Day 618500
Day 719000

On your first settlement day, your profit will be the same as Example A, which is 0.16129033 BTC.
However, on Day 6, the reference price is 18500 USD/BTC, which is higher than the knock-out price and therefore knock-out is triggered. The reference price is then capped to the knock-out price when calculating P&L:
[(Mt – Pt) x No. of Bitcoin per Day] / Mt BTC
= [(18000 - 15000) x 5] / 18000 BTC
= 0.83333334 BTC
And the contract will be closed on Day 6. Your overall P/L is as follow:

Settlement Day Reference Price (USD/BTC) P/L (BTC)
Day 1155000.16129033
Day 214500-0.17241380
Day 3150000.00000000
Day 4160000.31250000
Day 5170000.58823530
Day 6185000.83333334
Total1.72294517

You will receive your initial deposit + 1.72294517 BTC after settlement on Day 6.

Example C: 7-Day 5 BTC Bitcoin Decumulator (Knock-out & Guaranteed No. of Bitcoin)

Assuming you enter into a Bitcoin Decumulator contract with the following terms:

Term
No. of Bitcoin per Day5 BTC
Contract Life7 Days
Notional AmountNo. of Bitcoin per Day x No. of Settlement = 5 x 7 BTC = 35 BTC
Strike Price15000 USD/BTC
Knock-out Price13000 USD/BTC
Guaranteed No. of Bitcoin FeatureYes, guaranteed 20 BTC

After entering the contract, the Reference Price of each settlement is as follow:

Settlement Day Reference Price (USD/BTC)
Day 115500
Day 213500
Day 312500
Day 412000
Day 512800
Day 612050
Day 714000

On your first settlement day, your loss will be calculated as:
[(Pt - Mt) x No. of Bitcoin per Day] / Mt BTC
= [(15000 - 15500) x 5] / 15500 BTC
= -0.16129033 BTC

On Day 3, the reference price is 12500 USD/BTC, which is lower than the knock-out price and therefore knock-out is triggered. The reference price is then capped to the knock-out price when calculating P&L:
[(Pt - Mt) x No. of Bitcoin per Day] / Mt BTC
= [(15000 - 13000) x 5] / 13000 BTC
= 0.76923077 BTC
And the contract will be closed on Day 3.

As the total volume of BTC you sold (i.e. 15 BTC) is less than the guaranteed No. of Bitcoin (i.e. 20 BTC), the difference of 5 BTC (20 - 15 = 5) will be sold at the last settlement price, i.e. the knock-out price:
[(Pt - Mt) x (Total Volume of BTC sold - Guaranteed No. of Bitcoin)] / Mt BTC
= [(15000 - 13000) x 5] / 13000 BTC
= 0.76923077 BTC
And your overall P/L is as follow:

Settlement Day Reference Price (USD/BTC) P/L (BTC)
Day 115500-0.16129033
Day 2135000.55555556
Day 3125000.76923077
P&L from Guaranteed No. of Bitcoin0.76923077
Total1.93272677

You will receive your initial deposit + 1.93272677 BTC after settlement on Day 3.

Deposit Hedging Feature

Our Bitcoin Decumulator also comes with an optional feature called “Deposit Hedging Feature”. Enabling this feature allows you to short the same amount of your contract deposit during the contract life. The rationale of this feature is to prevent Bitcoin Decumulator investors to suffer loss from the depreciation of contract deposit in case the Bitcoin market price drops as predicted by the investor.

For example, if you enter into a Bitcoin Decumulator contract with a contract deposit of 10 BTC and Deposit Hedging Feature. The reference price on day 0 is 15000 USD/BTC. When the contract closed, the reference price on last settlement dropped to 12000 USD/BTC. Apart from your original profit from the Bitcoin Decumulator contract, you will also record a P/L of:
Initial Deposit * (Day 0 Reference Price - Last Settlement Reference Price) / Last Settlement Reference Price
= 10 * (15000 – 12000) / 12000 BTC
= 2.5 BTC

Note: The last settlement reference price will not be capped by knock-out price
However, if the reference price of last settlement is higher than the reference price on day 0, you will also record an additional loss.