In this write up, we will focus on non-custodial Ethereum based options.
🚀 Leverage
For every 1% movement up in $ETH, a call option may go up 10%.
🦔 Hedge
Protect your holdings, bet against $ETH with a put option or sell a call for additional income.
Below is an example showing the power of using call options as leverage, the timescale is 3 hours.
Comparing $ETH vs $ETH 3X Margin vs $ETH Call 2
Leverage
The focus is on maximizing your returns
👇 Follow the example below:
In this example we illustrate a $100,000 investment and what it would be worth in the future. We compare holding $ETH or an $ETH call. You can change any of the inputs below.
Change Starting Balance:
0000000
100000Starting Balance: $
100000
Assumption Delta 1% up movement in $ETH = 10% up move in $ETH Call
$ETH Balance Growth ($Dollar)
$ETH Balance Growth (%Percentage)
Hedge
The focus is on protecting your portfolio during a downturn but not losing all your exposure.
👇 Follow the example below:
Crypto markets have recently fallen 20-30%. Timing the market is a difficult feat to accomplish, however hedging your positions is imperative for long-term growth. In this example we illustrate an 80% long ETH and 20% short ETH utilizing $ETH Puts. We compare a $100,000 investment (100%) in $ETH and a $80,000 investment (80%) and 20% hedge ($ETH Puts). You can change any of the inputs below.
🔴 The below example has $ETH going down 26% over 10 hours.
Change Starting Balance:
0000000
100000Balance (80% $ETH): $
80000
Balance (20% $ETH Puts): $
20000
$ETH 100% vs Hedge 80% $ETH & 20% $ETH Puts ($Dollars) 2
$ETH 100% vs Hedge 80%$ETH & 20%$ETH Puts (%Percentage) 2
Conclusion
If you are a stakeholder in the Ethereum ecosystem, you stand to benefit by having access to a derivative such as options to help you either leverage or hedge your positions.
Next steps:
Want to print your doc?
This is not the way.
This is not the way.
Try clicking the ⋯ next to your doc name or using a keyboard shortcut (
CtrlP
) instead.