Introduction
Less than two months ago, the first one-click option strategies were released on Hegic. Instead of manually buying different options when constructing a strategy, calculating individual break-evens and P&L of your positions, you can trade structured option products on Hegic HardCore in one click.
Three new strategies are available from today: Strangle and Spreads (🐂 Bull Call Spread and 🐻 Bear Put Spread). Both Strangle and Spreads are now available for trading on Hegic HardCore (Arbitrum Network).
The Strangle will be your one-click option strategy of choice when you expect volatility to rise significantly and want to pay a very low price for your bet.
The Spreads will help you to win on local rises or drops in volatility with a lower cost of the strategy than buying a separate at-the-money option.
Bullish, Bearish, and High Volatility Strategies
All one-click option strategies are now sorted in the Hegic interfaces according to the market sentiment that suits them best.
You can find them all on https://www.hegic.co/ → Launch Hegic and Connect to Arbitrum → Buy Options → Buy Strategies
🐂 Bullish strategies are Strap and Bull Call Spread: play with them when you think prices will go up 📈
🐻 Bearish strategies are Strip and Bear Put Spread: play with them when you think prices will go down 📉
⚡️ High volatility strategies are Straddle and Strangle: play with them when you think prices will drastically change in either direction 📈📉
New One-Click Option Strategies
⚡️ Strangle = 1x OTM Call + 1x OTM Put
The Strangle is a strategy that helps you to make a bet on a volatility rise: that the price of an asset will soon rise or fall significantly in either direction. The Strangle consists of an out-of-the-money call option and an out-of-the-money put option with the same strike price and the same expiration.
Instead of being bullish or bearish about the future price, you can have the following reasoning when buying it: “I don’t care what the price will be, but if it changes significantly in either direction during the period of holding the Strangle, I win big.”
The Strangle is much cheaper than the Straddle (which consists of two at-the-money options). This means that you will pay much less when buying Strangles (two out-of-the-money options) and have a higher profits potential.
The Strangle has a limited cost and unlimited potential profit.
🐂 Bull Call Spread = 1x ATM Call with Capped Upside
The Bull Call Spread is a strategy that helps you to make a bet on a local price rise while paying less than for an at-the-money call option.
The break-even price will also be lower than in the ATM options as the price should rise just a little higher for the Bull Call Spread to be in-the-money.
This is achieved by simultaneously selling an out-of-the-money call option with a higher strike price when you buy an at-the-money call option, as this is the essence of the Bull Call Spread.
The Bull Call Spread has a limited low cost and capped potential profit.
🐻 Bear Put Spread = 1x ATM Put with Capped Upside
The Bear Put Spread is a strategy that helps you to make a bet on a local price drop while paying less than for an at-the-money put option.
The break-even price will also be lower than in the ATM options as the price should drop just a little lower for the Bear Put Spread to be in-the-money.
This is achieved by simultaneously selling an out-of-the-money put option with a lower strike price when you buy an at-the-money put option, and this is the essence of the Bear Put Spread.
The Bear Put Spread has a limited low cost and capped potential profit.
Magic Behind Hegic’s One-click Options Spreads
When buying spreads (buy 1x ATM option + sell 1x OTM option) on centralized exchanges, you need to provide the margin for the options that you are selling. This means that you will have to inefficiently allocate your capital for holding a spread since when you sell options, you need to guarantee that the potential profit will be paid to its buyer.
Buying Spreads on Hegic doesn’t require providing margin or collateral except for the premium you pay for it. You won’t need to monitor your margin requirements. This makes Hegic’s one-click Spreads a highly effective strategy in terms of cost of capital and P&L potential.
All Spreads can be exercised at any moment during the period of holding (American-style options).
Here’s a comparison of the 1 ETH bull call spread acquired on 1) a centralized options exchange; 2) a Bull Call Spread strategy on Hegic:
🐂 1 ETH Bull Call Spread, 21 days period, acquired on a CEX:
● 1 ETH Bull Call Spread cost: $117
● Required margin: 1 ETH ($3,030)
● Total required capital: $117 + $3,030 = $3,147
● Max. net P&L ($): +$183
● Max. net P&L / capital (%): +6%
🐂 1 ETH Bull Call Spread, 21 days period, acquired on Hegic:
● 1 ETH Bull Call Spread cost: $132
● Required margin: 0 ETH ($0)
● Total required capital: $132 (x24 less) ✳️
● Max. net P&L ($): +$168
● Max. net P&L / capital (%): +127% (x21 higher) ✳️
🐻 1 ETH Bear Put Spread, 21 days period, acquired on a CEX:
● 1 ETH Bear Put Spread cost: $113
● Required Margin: 1 ETH ($3,030)
● Total required capital: $113 + $3,030 = $3,143
● Max. net P&L ($): +$187
● Max. net P&L / capital (%): +6%
🐻 1 ETH Bear Put Spread, 21 days period, acquired on Hegic:
● 1 ETH Bull Call Spread cost: $144
● Required Margin: 0 ETH ($0)
● Total required capital: $144 (x22 less) ✳️
● Max. net P&L ($): +$156
● Max. net P&L / capital (%): +108% (x18 higher) ✳️
Start playing with Strangles and Spreads today!
Join Hegic Discord → 🌁#hardcore-beta and share your feedback about the new one-click option strategies or anything else related to Hegic HardCore.
Take care,
Molly Wintermute
4/15/22
Attention: Live in Beta
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