How does a financial accumulator work?

The buyer of an accumulator contract agrees to buy a fixed number of stocks on each observation date, at a given strike price which is usually at around 10% discount to the prevailing price of the underlying in the market, till expiry or early termination date.

How are accumulators structured?

An Accumulator on Equity is embedded with a series of options on the underlying Share. The investor is long a series of Call Options on the underlying Share that allows the investor to buy the underlying Share if the price of the underlying Share is at or higher than the Forward Price.

Why do investors buy accumulators?

Investors may find accumulators attractive as the products generally allow them to buy (or “accumulate”) an agreed number of contract units of the underlying asset, such as a stock or a foreign currency, at a “discount” to the prevailing market price of the underlying asset (i.e. strike price) at the date of the …

What is a Decumulator?

— A Decumulator is a structured product which allows. the investor to sell a certain number of shares. (“Underlying”) at a pre-determined price (“Strike. Price”), which is usually set higher than the spot.

How are accumulators used in the financial market?

Accumulator (structured product) Financial markets. Accumulators (aka: share forward accumulators) are financial derivative products sold by an issuer (seller) to investors (the buyer) that require the buyers to buy shares of some underlying security at a predetermined strike price, settled periodically.

What does it mean to be an accumulator?

Accumulators (aka: share forward accumulators) are financial derivative products sold by an issuer (seller) to investors (the buyer) that require the buyers to buy shares of some underlying security at a predetermined strike price, settled periodically. This allows the investor to “accumulate” holdings in…

How are share forward accumulators a structured product?

Accumulator (structured product) Accumulators (aka: share forward accumulators) are financial derivative products sold by an issuer (seller) to investors (the buyer) that require the buyers to buy shares of some underlying security at a predetermined strike price, settled periodically. This allows the investor to “accumulate” holdings in

What is the definition of accumulation in finance?

Accumulation occurs when the quantity of something is added to or increases over time. In finance, accumulation more specifically means increasing position size in one asset, increasing the number of assets owned/positions, or an overall increase in buying activity in an asset.