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Olive a stock with a cushion = lose nothing if stock stays above cushion price
Let’s say you use Olive to invest $10,000 in ABC Corp with a 35% downside cushion. ABC loses 25% of its value over the outcome period, but you would have lost nothing because the downside cushion protects you from losses, unless ABC falls by more than 35%.
In exchange for the downside cushion, your return is limited by the upside ceiling. If your ceiling is 25% then even if ABC rises by 40%, your return will be capped at 25%. The trade-off is to forego unlimited upside in exchange for downside protection. Hence, this type of outcome is not too good to be true.
You can have more control and sleep better with Olive. Choose a small downside cushion with higher or accelerated upside or a large downside cushion with lower upside. Olive offers the tools you need to explore what the market is willing to offer real-time and through a delightful user interface.
Let’s say you have extra cash and have a few stocks you like. But the markets have been on a tear and you are afraid that you might be getting in at the wrong time. That said, you also fear missing out on the profit if the stocks you like keep going up.
Olive can help. Let's say you like OLIV, which is up over 50% the past year. You think OLIV can go higher but you don't want to get the timing wrong.
With Olive, you can customize how much upside you want to keep in exchange for some downside cushion you prefer. For instance, you may like the idea of participating in the gain of OLIV up to 20% but only start to incur any loss if OLIV drops by more than 15% in the next year.
Now let’s say it’s a stagnant market and you think that markets are likely to move sideways for the foreseeable future. Olive can help you accelerate your gains and capture as much upside as quickly as possible.
Let's say you are looking at OLIV and you think it may go up 8-12% in the next year. But you want more. With Olive, you can accelerate your upside by a factor of 2x, 3x, or more, while taking the same downside as owning OLIV outright. For instance, you can make 3x the profit on OLIV up to 27% in the next year.
This means that if OLIV rises by 1%, you will make 3%. If it rises by 3%, you will make 9%. And so on. You will get 27% if OLIV rises by 9% but that is your cap. If OLIV rises by 30% or 50%, your gain will be 27%. On the flip side, your downside is exactly the same as if you are buying OLIV. If OLIV falls by 10%, you lose 10% and so on.
You see that bond yields are at historic low and if interest rates rise, the value of your bonds will decline. You have stocks that pay dividends but you don't want to stomach the volatility of the market. Still, you want some passive income that comes with less risk.
Olive can help. Let's say you are looking at OLIV, which pays a dividend yield of 2.1%. The problem is that OLIV's stock price is at risk of falling and you are not buying OLIV for growth. Rather you want it for income. With Olive, you can transform OLIV into an income instrument where unless OLIV drops by more than a certain percentage, you will make a fixed amount of profit.
For instance, you can make 8% fixed return on OLIV, unless OLIV falls by more than 20% and you will not lose any principal until OLIV falls by more than 22%. You are giving up the upside on OLIV beyond 8% for the certainty that you will make 8% no matter what OLIV stock does, as long as it does not drop by more than 20%.