What? Limited reward with unlimited risk?

I hope I never get caught in something like this. Here's a piece on "accumulator" contracts. Where you have a one-year contract to purchase a stock every day at a discount. In this example they said you buy a $10 stock for $8 (20 percent discount) every trading day for one year. Sounds great, right? It's a purchase at a 20 percent discount, but if you could sell, it's actually a 25 percent gain!

Here the problem. If the stock goes up five percent, the contract gets cancelled. So you bought a bunch at $8.00 and once it hits $10.50, you no longer can buy at the $8.00 price. On the flip side, if the price drops to less than $8.00, you actually need to buy even more. In some cases, double the amount. Talk about a way to try and support the price of a particular stock.

So the maximum reward is $2.50 and any capital appreciation/dividends beyond $10.50, but the "guaranteed" 25 percent return is gone. The risk is (nearly) unlimited.

Beware, and read the fine print.

Click here to read more details.