Bespoke strategy construction
Trade options strategies / combos atomically in one transaction
Rysk Beyond enables trading of options strategies, where traders can combine different vanilla options into a strategy that is executed atomically in one transaction.
As an example, a trader can long a 26-MAR-23 $1700 Call and short a 26-MAR-23 $2000 Call to create a call spread, executed atomically in one transaction reducing execution risk and increasing capital efficiency. In this specific case, the long option (26-MAR-23 $1700 Call) plus the difference in strike price ($300) can be used as collateral for the short option (26-MAR-23 $2000 Call) increasing overall capital efficiency vs trading the options stand-alone.
The following strategies are already available:
Credit Spreads
Learn how to trade Credit Spread on Rysk
The goal of a credit spread is to generate a net credit upfront by selling the more expensive option and buying the cheaper option.
Payoff
The net credit received is the maximum profit potential of the trade. The maximum loss for a credit spread is limited to the difference in strike prices minus the net credit received when initiating the trade.
Call Credit Spread
Credit spreads can be constructed using either call options or put options. When using call options, the trader sells a lower strike price call option and buys a higher strike price call option on the same expiry. This strategy is known as a bear call spread and is used when the trader has a bearish sentiment and expects the price of the underlying asset to remain below the lower strike price.
Example
Short Position
Option: ETH 27OCT23 $1700 CALL
Premium: $39.64
Long Position
Option: ETH 27OCT23 $1800 CALL
Premium: $18.87
Credit Spread
Net premium received: $20.77 (short premium - long premium)
Cash collateral required: $100 (long strike - short strike)
Break-even: $1720.77 (short strike + net premium received)
Max loss: $79.23 (long strike - short strike - net premium)
Put Credit Spread
When a credit spread is using put options, the trader sells a higher strike price put option and buys a lower strike price put option on the same expiry. This strategy is called a bull put spread and is employed when the trader has a bullish sentiment and anticipates the price of the underlying asset to stay above the higher strike price.
Example
Short Position
Option: ETH 27OCT23 $1650 PUT
Premium: $47.10
Long Position
Option: ETH 27OCT23 $1550 PUT
Premium: $22.91
Credit Spread
Net premium received: $24.19 (short premium - long premium)
Cash collateral required: $100 (short strike - long strike)
Break-even: $1625.81 (short strike - net premium received)
Max loss: $75.81 (short strike - long strike - net premium)
Debit Spreads
Learn how to trade Debit Spread on Rysk
A debit spread, similar to a credit spread, involves simultaneously buying and selling options contracts with different strike prices but the same expiration date. However, the goal of a debit spread is to have a net long position by buying the more expensive option and selling the cheaper option.
Payoff
This net premium paid (debit) is the maximum loss potential of the trade. The maximum profit for a debit spread is limited to the difference in strike prices minus the net debit paid when initiating the trade.
Call Debit Spread
Debit spreads can be constructed using either call options or put options. When using call options, the trader buys a lower strike price call option and sells a higher strike price call option on the same expiry. This strategy is known as a bull call spread and is used when the trader has a bullish sentiment and expects the price of the underlying asset to rise above the lower strike price.
Put Debit Spread
On the other hand, when using put options, the trader buys a higher strike price put option and sells a lower strike price put option on the same expiry. This strategy is called a bear put spread and is employed when the trader has a bearish sentiment and anticipates the price of the underlying asset to fall below the higher strike price.
Long Straddle
Learn how to trade Long Straddle on Rysk
Feeling the volatility will increase but don’t have a strong opinion in which direction the market will move? A long straddle is your strategy!
This involves purchasing both a PUT and an CALL with the same strike and expiry. The strategy aims to capitalize on a spike in volatility and a significant shift in the underlying spot price, irrespective of the direction.
Straddles are useful when it’s unclear what direction the underlying price might move in, but a spike in volatility is expected
Payoff
The maximum loss for a long straddle is the combined premiums of the two long positions.
While the profit potential is limitless, a movement in one direction before expiration is necessary for potential profitability. The net profit equals the premium received from closing the position minus the premium initially spent on the strategy.
The break-even point for the trade is the sum of the premium paid (CALL premium + PUT premium) above or below the strike price.
Example
ETH price: $1,845
Sentiment: Neutral
Strategy: Long straddle
First Leg: LONG 25AUG23 $1850 PUT
Premium: $38.17 (27% IV)
Second Leg: LONG 25AUG23 $1850 CALL
Premium: $34.50 (30% IV)
Premium paid: $72.67
Breakeven: below $1777.33 or above $1922.67
Max profit: unlimited
Max loss: $72.67
Long Strangle
Learn how to trade Long Strangle on Rysk
Long Strangle is a similar strategy to long straddle with few main differences:
Payoff
The maximum loss on the trade is defined at entry and it’s the sum of the premium to long the PUT and CALL.
The potential for profit is technically unlimited, though a large move in one direction before expiration is required. Compare to straddle the directional and volatility movement required to be profitable is higher, since the price to enter is lower.
Example
ETH price: $1,845
Sentiment: Neutral
Strategy: Long strangle
First Leg: LONG 25AUG23 $1800 PUT
Premium: $16.94 (29% IV)
Second Leg: LONG 25AUG23 $1900 CALL
Premium: $18.94 (30% IV)
Premium paid: $35.88
Breakeven: below $1764.12 or above $1918.94
Max profit: unlimited
Max loss: $35.88
Other Strategies
The following options strategies can be constructed on Rysk. Some are already available in the UI, some will be released soon!
| Strategy | Example Buy | Example Sell |
|---|---|---|
Call Spread | Long 1x 26-MAR-23 $1700 Call Short 1x 26-MAR-23 $2000 Call | Short 1x 26-MAR-23 $1700 Call Long 1x 26-MAR-23 $2000 Call |
Put Spread | Long 1x 26-MAR-23 $1000 Put Short 1x 26-MAR-23 $1200 Put | Short 1x 26-MAR-23 $1000 Put Long 1x 26-MAR-23 $1200 Put |
Straddle | Long 1x 26-MAR-23 $1600 Put Long 1x 26-MAR-23 $1600 Call | Short 1x 26-MAR-23 $1600 Put Short 1x 26-MAR-23 $1600 Call |
Strangle | Long 1x 26-MAR-23 $1500 Put Long 1x 26-MAR-23 $1700 Call | Short 1x 26-MAR-23 $1500 Put Short 1x 26-MAR-23 $1700 Call |
Call Calendar Spread | Long 1x 30-APR-23 $2000 Call Short 1x 26-MAR-23 $2000 Call | Short 1x 30-APR-23 $2000 Call Long 1x 26-MAR-23 $2000 Call |
Put Calendar Spread | Long 1x 30-APR-23 $1000 Put Short 1x 26-MAR-23 $1200 Put | Short 1x 30-APR-23 $1000 Put Long 1x 26-MAR-23 $1200 Put |
Call Butterfly | Long 1x 26-MAR-23 $1500 Call Short 2x 26-MAR-23 $1700 Call Long 1x 26-MAR-23 $2000 Call | Short 1x 26-MAR-23 $1500 Call Long 2x 26-MAR-23 $1700 Call Short 1x 26-MAR-23 $2000 Call |
Put Butterfly | Long 1x 26-MAR-23 $1500 Put Short 2x 26-MAR-23 $1700 Put Long 1x 26-MAR-23 $2000 Put | Short 1x 26-MAR-23 $1500 Put Long 2x 26-MAR-23 $1700 Put Short 1x 26-MAR-23 $2000 Put |
Call Condor | Long 1x 26-MAR-23 $1500 Call Short 1x 26-MAR-23 $1700 Call Short 1x 26-MAR-23 $1800 Call Long 1x 26-MAR-23 $2000 Call | Short 1x 26-MAR-23 $1500 Call Long 1x 26-MAR-23 $1700 Call Long 1x 26-MAR-23 $1800 Call Short 1x 26-MAR-23 $2000 Call |
Put Condor | Long 1x 26-MAR-23 $1500 Put Short 1x 26-MAR-23 $1700 Put Short 1x 26-MAR-23 $1800 Put Long 1x 26-MAR-23 $2000 Put | Short 1x 26-MAR-23 $1500 Put Long 1x 26-MAR-23 $1700 Put Long 1x 26-MAR-23 $1800 Put Short 1x 26-MAR-23 $2000 Put |
Iron Condor | Short 1x 26-MAR-23 $1500 Put Long 1x 26-MAR-23 $1700 Put Long 1x 26-MAR-23 $1800 Call Short 1x 26-MAR-23 $2000 Call | Long 1x 26-MAR-23 $1500 Put Short 1x 26-MAR-23 $1700 Put Short 1x 26-MAR-23 $1800 Call Long 1x 26-MAR-23 $2000 Call |
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