Market Superiority — Polygon hidden growth drivers and prospects of the industry leader.
Polygon (MATIC) is a Layer 2 Proof-of-Stake solution for scaling the Ethereum core blockchain. It is currently the crypto industry leader in zero-knowledge development and optimistic roll-ups. The team has a long-term development plan and is focused on executing it — hiring the best engineers and talented teams in the market. The project is currently ranked 18th among the largest with a capitalisation of more than $11.4 billion.
The MATIC token is utilitarian and is widely used in network operations as well as in the launch of new applications. There are currently more than 350k daily active users on the stack. The most popular applications are the decentralised exchange QuickSwap and the gaming application Crazy Defence Heroes.
Polygon, like most large crypto companies, made the most of the market rally over the past two years. After hitting an all-time price high of 2.85 USD, MATIC corrected and hit a local low of 1.30.
It is also worth noting that most recently, in February 2022, the company struck a huge deal in which it raised $450 million from a consortium of major investment funds.
This week also sees a secret but crucial announcement, which the press office promises is key to Polygon’s activities for the near future.
Despite the cryptocurrency market’s overall high correlation with Bitcoin and thus with the stock market, MATIC has the characteristics of a leader, and is capable of outperforming the market. Given that news is important in determining price, it is very likely that a surge in volatility will drive the value of the token higher.
The investment idea is to bet on a local (up to a month) increase in value of around 15% of the current price — tentatively to 1.65 USD (at the current 1.43 USD).
1. Long position in the spot market (or futures market). Expected yield is from 15% per month .
2. Buy call options with a strike price of 1.4 USD and an execution date between one week and one month (example of transaction parameters). Potentially, it is possible to finance the purchase of call options by selling put options (using a risk reversal strategy) with the same execution date, but at a price lower than the current price (example transaction parameter #2).
In case of combination of options is used, the returns will be complex and with a different level of risk. The total value will consist of the expected return from the option purchased and will depend on the exit point.
Approximate calculating the profitability of an option strategy.
Date 29 Apr (9 day) / IV=80% / 1 lot size= 10 MATIC
Strike / CALL / __Link__ / PUT / Link
1.3$ / 0.15 / _________ / 0.03 / example
For example, the trader’s capital is 150 USD. There are several options on how to use it to implement an investment idea using options.
Sell PUT option at exercise price of $1.3. We will get 11 full lots + 6 USD. For the received premium (11*10*0.03)=3.3 USD you can buy 4 lots of CALL options with the strike price 1.4$. In case of reaching the target price of $1.65, the profit will be 4*10*0.25=10 USD for 9 days = 150% per annum.
Sell PUT option at $1.4. It will be 10 full lots + 10 USD. For the received bonus (10*10*0.07)=7 USD you can buy 17 lots of CALL options with the strike price 1.5$. In case the target price reaches $1.65, the profit will be 17*10*0.15=25.5 USD for 9 days = 340% per annum.
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