What is a 'Dip Sniper'?

'Dip Sniper' is one of RockFlow's innovative options products. After selling, you receive an option premium right away, with the opportunity to buy a stock at a price better than its current market price.

What benefit can 'Dip Sniper' offer to me?

When you are bullish on a company in the long term and want to buy its stock, you might have an ideal buying price in mind, and are willing to buy a certain amount of it as long as the stock price goes down to that ideal price in the next week/month/quarter.

'Dip Sniper' is just perfect for this scenario! The product offers different buying plans (stock, ideal buying price and expiry date) to choose from. If the trade succeeds, you receive an option premium, even if you don't end up buying the stock.

Nature of 'Dip Sniper'

The nature of 'Dip Sniper' is the selling of put option. RockFlow has selected a list of high potential stocks from the options pool, and simplified the product innovatively so that the product can be easy for first timers. The cash earnings are the price of the put option that the buyers pay to you. The complete life cycle of buying a 'Dip Sniper' is:

Choosing a 'Dip Sniper' (sell a put option) is a great way for you to acquire shares of a good company at a desired price and earn additional income. After RockFlow's optimization, options are no longer an exclusive trading strategy only for professional investors. We hope that Rockers can easily participate and experience the fun of option investment.

Where do I find 'Dip Sniper' at RockFlow app?

You can click on the 'Dip Sniper' section on the stock details page for the stock's 'Dip Sniper' product list, or enter 'Dip Sniper' product glossaries from the main page.

How do I buy a 'Dip Sniper' product?

It's very easy! RockFlow has prepared a 'Dip Sniper' product with a combination of information of "stock, target purchase price, and expiration date" for you. All you need to do is to choose which one to buy.

  1. Choose your long-term bullish stocks
  2. Determine the target purchase price of this stock in your mind
  3. Determine how long you are willing to buy the stock at this price
  4. Choose the quantity to buy, select purchase, and the product will be in your bag!

What happens after I buy a 'Dip Sniper' product?

When you place a 'Dip Sniper' order, RockFlow freezes part of the funds in your account as margin according to the margin requirements. Once the trade succeeds, you receive an option premium right away 🎉. The required margin may increase as the stock price falls.

The following outcomes are possible:

  1. No shares are purchased by expiration: your margin is released, and you keep the premium.
  2. Before or at expiration, you buy the agreed number of shares at the target price.
  3. You close the position yourself: during trading hours, you can buy back the contract at any time to end it early. You profit if the buyback price is below the premium received, and lose if it is higher.
  4. Forced close due to insufficient margin: if the stock falls sharply before expiration and your account no longer has enough funds to meet the margin requirement, the system will buy back the contract. The loss may exceed the premium received.

After the upgrade, 'Dip Sniper' appears as “Short Put Bear” in your holdings.

Example

Suppose Apple is trading at $150, but you would rather buy 100 shares at $130. You buy an Apple 'Dip Sniper' with a target price of $130 and a 5-day expiration. The following outcomes are possible:

  1. If Apple's closing price is below $130 at expiration, you buy 100 shares and keep the $40 premium.
  2. If Apple's closing price is above $130 at expiration, you don't buy shares and still keep the $40 premium.
  3. Early close: on day 2, Apple rises to $155 and buying back the contract costs $10. You can pay $10 to close early, making $30 ($40 − $10).
  4. Forced close: on day 2, Apple drops to $128 and buying back the contract costs $400. If your account doesn't have enough funds to meet the margin requirement, the system will force a close: you received $40 and pay $400, for a net loss of $360, and you don't get the shares.

The risk of buying a 'Dip Sniper' product

The risks and benefits of any investment coexist. The risk of a 'Dip Sniper' mainly comes from a falling stock price. The purchase price is agreed in advance, but the timing is uncertain, so when you acquire shares through 'Dip Sniper', the stock price may already be below the agreed price.

'Dip Sniper' requires margin. If your account doesn't have enough funds to meet the margin requirement, the system may forcibly buy back the contract before expiration. This realizes the loss immediately; it may exceed the premium received, and you won't get the shares. To reduce the risk of a forced close, keep sufficient funds in your account. In extremely volatile, high-risk market conditions, RockFlow reserves the right to close positions without prior notice.

Choose companies you believe in for the long term, and don't blindly pursue approximate annualized returns.

Finally, we would like to remind everyone to invest rationally. Within the risk range that you can bear, trade 'Dip Sniper' rationally!