Why do we need to borrow HERO's? Can't we accomplish the same if they are purchased? If they price of HERO goes up to what it was at the end of May there will be a lot of margin calls.
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Why do we need to borrow HERO's? Can't we accomplish the same if they are purchased? If they price of HERO goes up to what it was at the end of May there will be a lot of margin calls.
If you buy HEROs you are just lending your money to the borrower at 5%.
If you borrow HEROs you are agreeing to pay 5% and locking up collateral to back the loan.
Simple as that.
Why do people take out home equity loans and use their house as collateral to back it?
Same thought process and motivation.
Well put @Stan, can't make it any easier to understand than that.
Of course a simple explanation always leads to secondary questions, such as how do I claim or access the 5% interest on the loan if I BUY HEROS? Or, what if the price of BTS stagnates (doesn't move up or down significantly as months go by)? These are valid questions, but they are SECONDARY and don't address the MAIN CONCEPTS of what the HERO promotion is trying to achieve or the ESSESNTIALS,
Your comment here PERFECTLY describes the ESSENTIALS.
Thanks for your efforts Grandad! :)