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:
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
Strategy Highlights
Market Outlook | Neutral 📈📉 |
Volatility | Works best when volatility is increasing |
Profit Potential | Unlimited |
Risk Strategy | Defined max loss |
Setup | Multi-leg with 2 options. - Long PUT ATM - Long CALL ATM same expiries |
Premium | Pay money to enter a LONG straddle (sum of PUT and CALL premium) |
Time | Lose value as time passes |
Long Strangle is a similar strategy to long straddle with few main differences:
Long Straddle | Long Strangle |
|---|---|
ATM options with same strike price | OTM options with different strike prices |
More expensive to implement | Cheaper to enter cause options are OTM |
Net value of the options changes with any change in the underlying price. | Larger change in the underlying price is required before the net value of the options changes. |
No directional bias | Can be constructed skewed in a certain direction in case there is a belief that the underlying can move in a direction, but would still like to be protected in the case of an opposite move. |
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
Strategy Highlights
Market Outlook | Neutral 📈📉 |
Volatility | Works best when volatility is increasing |
Profit Potential | Unlimited |
Risk Strategy | Defined max loss |
Setup | Multi-leg with 2 options. - Long PUT OTM - Long CALL OTM same expiries |
Premium | Pay money to enter a LONG strangle (sum of PUT and CALL premium) |
Time | Lose value as time passes |
The following options strategies will be available in the future but you can construct these strategies via the smart contracts directly if you are really keen!
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 |
Last modified 1mo ago